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3 Main Reasons why Bitcoin’s Price Plummeted

bitcoin sell trend

June 12, 2020 | 

JOHN K MWANIKI |  0 Comments| 

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The price of Bitcoin has taken a beating in recent times, plummeting to reach the lows of $3600. Even though it's not the first time the coin losses value, the recent movements have shocked the investor community, with Bitcoin perceived as a safe asset. The sustained drop has seen the value of the coin reduce by as much as $93.5 billion.

bitcoin bearish sentiment

Here are the three main reasons for the Bitcoin price plummeting in recent times;

Reaction to the World Slowing Economy

For some time, most investors have taken to Bitcoin as an alternative market. They have considered it a haven that is likely to hit the roofs when the traditional model market goes down. Maybe they have been wrong, following the reactions of Bitcoin with a slowing conventional money market.

The widespread Coronavirus has hit the money markets due to the stalled economy. With less money to spend and uncertainties, investors are unwilling to look for high-risk assets like Bitcoin. The low demand means the prices have to reduce up to the lows of $3,600.

Even though not given much attention, the oil price wars between Saudi Arabia and Russia also have a bearing on plummeting prices. With the oil hitting the lowest prices in years, the global markets suffer. It, in turn, increases the market uncertainties, thus investor fears, and instability. With the investor fears, no one is willing to take a risk at Bitcoin, continuing its downward spiral.  

It implies that the coin might continue to struggle for some time until the central banks provide economic recovery plans like stimulus packages.

The Big Dump

The free fall of the Bitcoin prices can also be attributed to the dump by some of the largest Bitcoin holders. In anticipation of the oil price wars, PlusToken moved over $1million worth of Bitcoin back to the market. It used mixers to conceal the move. Afterwards, they also dumped another 13,000 bitcoins, leading to a flooded market.

The other big industry player to have dumped their Bitcoin is Whales, moving their resources to Binance and BitMex. Any big dump of the coins triggers a market saturation leading to a lower value.

Bitcoin Multilayer Resistance

One of the significant concerns about Bitcoin's volatile nature is its ability to manage higher values. The coin has struggled before to surpass some values leading to stalling. With the amount reaching over the $10,000 in recent times, the site is struggling to hold such. So far, it has failed thrice to accommodate the $10,500 price cap.

Even though these are easy to correct with proper testing and upgrades, the current inactive economy does not promise much.

Bottom Line

Due to its safety, having been touted as the "online gold," investors are back to wondering if Bitcoin is as secure as they assumed. The other concern is the continued dumping of coins. A reduction in value triggers sales, forcing Bitcoin to put sell limits in recent times. Still, whatever happens, the investors recognize that the values will rise once more.

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