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The price of Bitcoin (BTC) has seen a significant decline over the past 24 hours, falling below the critical threshold of $70,000. After reaching a peak of $73,620 on Tuesday, the cryptocurrency fell by about 5.7%, reaching a low of $68,830 on Friday. Analysts point to several key factors behind this decline:
#1 Risk-off sentiment ahead of US elections
The timing of Bitcoin’s price decline coincides with the narrowing of former President Donald Trump’s lead over Democratic nominee Vice President Kamala Harris in prediction markets such as Polymarket And like, where users bet on the election results. Bitcoin has been deemed a “Trump hedge” due to the former president’s strong defense of the cryptocurrency sector.
Donald Trump has proposed creating a “strategic bitcoin reserve” in the United States if he is re-elected. Speaking at the Bitcoin 2024 conference, he outlined plans to hold all bitcoins currently owned or acquired by the US government as part of this reserve. The initiative is a key component of his campaign to cement the United States as a leader, with the goal of making the country the “crypto capital of the planet.”
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Earlier in the week, when Trump’s lead over Harris was most significant, Bitcoin approached an all-time high of $73,777. Trump’s diminishing lead appears to have prompted investors to adopt a risk-averse stance, contributing to the decline in prices.
Cryptocurrency Analyst HornHairs male De-risking before elections has precedent. “The election risk occurred 5-6 days before it was held in both 2020 and 2016. The price then went on to never retest the lows set the week before the election ever again. “Be careful what you sell here,” he said via X .
#2 The S&P 500 is losing its 3-month trend line
The connection between Bitcoin and traditional financial markets may have also influenced Bitcoin price movement. The S&P 500 index fell to its lowest level since October 9, which may impact investor sentiment in the cryptocurrency space.
Analysts from The Kobeissi Letter noted that even though big tech companies like Apple reported strong earnings, their stock prices declined. “Another tech giant beats earnings but trades lower.” maleAdding that technology stocks faced widespread selling even as Meta, Amazon and Apple’s earnings beat earnings expectations. They added: Markets appear to be de-risking ahead of the elections next week. Prepare for volatility.
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Cryptocurrency trader Marco Johanning Highlight Concerns about the S&P 500 missing its three-month trend line. “Given that the S&P 500 lost its 3-month trend line yesterday, it looks more like a potential sell-off ahead of the US elections on Tuesday and a short-term price decline. The ideal retracement level is the 7-month trend line (blue). I don’t want to see prices Below POC/Main level by about 63k (red),” he wrote via X.
#3 Leverage is flowing
The significant unwinding of leveraged positions in the markets has also contributed to the decline in Bitcoin prices. Market correction appears to be a healthy response to excessive expansion resulting from leverage.
Renowned cryptocurrency analyst Miles Deutscher noted, “This pullback is normal (and expected). The market has been looking overly extended in the past few days, and has been largely driven by leverage. Still don’t buy large amounts because it’s not a full chain yet — will wait.” One of those days around the election is not a bad day for DCA for some coins.”
Austin Reed, global head of revenue and business at cryptocurrency prime broker FalconX, noted that the cryptocurrency derivatives market was “on fire” ahead of the election, with open futures contracts for BTC, ETH and SOL surpassing the US$50 billion mark. First time.
On-chain analyst Axel Adler Jr reported that open interest was reduced By $2.1 billion, which means a large influx of financial leverage.
according to Data From Coinglass, in the past 24 hours, 93,864 traders were liquidated, with a total liquidation of $286.73 million. The largest single liquidation order for the BTCUSDT pair occurred from Binance, worth $11.26 million. For Bitcoin alone, $81.38 million of long positions were liquidated – the largest amount since October 1.
At press time, Bitcoin was trading at $69,446.
Featured image created with DALL.E, a chart from TradingView.com
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