What Caused Bitcoin To Drop Below $16,000?

Given that most of the dust has settled after the FTX disaster, the most recent Bitcoin decline has startled the majority of market players.

However, despite Santiment’s explanation, the first cryptocurrency is still struggling to withstand the selling pressure. The decline to $15,800 for the first time in two years, according to the analytical agency, was brought on by FUD because of the growing mistrust of centralized exchanges following the FTX scandal.

To remove leftover cash and reduce portfolio leverage, the majority of investors in derivatives markets are liquidating their positions. The first cryptocurrency can reach prices that haven’t been seen in years with the help of such a sharp increase in selling pressure at a time when the entire market is struggling with liquidity.

The increase in address activity that typically occurs when investors transfer holdings from third parties to self-custody during a significant exchange outflow period supports this thesis as well. When the market is recovering, the opposite of this process typically occurs as traders move their money back onto trading platforms in an effort to employ leverage to increase their profits or expose themselves to alternative assets.

The market’s continued stagnation as a result of a lack of liquidity and fresh inflows is the most likely outcome at this point. Institutional investors continue to steer clear of exposure to digital assets. Until the stretch monetary policy in the US takes hold and investors refrain from taking on extra risk exposure, the situation is unlikely to alter.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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