Last night, the bitcoin price suddenly collapsed, after the crypto slowly fell down over the past few days. At the time of writing, the price is about 4% down from last night, and about 17% down from its mid-July peak. Crypto asset manager CoinShares explains the likely reasons for this.
Bitcoin is falling due to politics and economics
On Twitter, CoinShares director of research James Butterfill writes that the crash was caused by at least five different factors. For example, there are growing indications that the US Securities and Exchange Commission will not soon approve a so-called spot ETF. According to some analysts, that will not happen until the United States has a new government.
Our thoughts on what’s behind the recent Bitcoin price crash:
– Prompted by the market realising that the SEC approval of a Bitcoin ETF in the US isn’t imminent.
– Fears over the economic downturn in China gathering pace as deflation sets in, although this could ultimately…
— James Butterfill (@jbutterfill) August 18, 2023
According to Butterfill, China’s economic deterioration is also an important factor – the country is already struggling with deflation. However, this could be beneficial in the long run if the Chinese financial sector suffers too much.
But not only China is affected by the changing economy. The Netherlands is now officially in a recession, and the economy of the United States is also slowly weakening.
Bitcoin traders are absent
There are also identifiable causes in the crypto market itself. There is a lack of buyers and sellers. Today, only about USD 2.3 billion worth of Bitcoin is traded per day, compared to USD 11 billion at the beginning of this year. That makes it easier to influence the price.
This picture is confirmed by the fact that volatility has been very low recently – the monthly price change has not even been this low before. This indicates that the market is gearing up for a major price change.
It’s possible that SpaceX may have been a determining factor in this as well. The company announced that it has sold $373 million worth of bitcoin, which it will purchase in 2021. This news has not yet been confirmed.
The Federal Reserve has also raised US policy rates to a 20-year high. This makes it less attractive to borrow money, which usually has a negative effect on financial markets. Logically, this is also not favorable for bitcoin (BTC).
2023-08-18 19:01:08
#Researcher #shares #reasons #bitcoin #price #crash
