Bitcoin Price Slides Below $70,000: These Are The Key Reasons

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As a seasoned crypto investor with over a decade of market experience under my belt, I have learned to navigate through the ups and downs that this dynamic industry presents. The recent dip in Bitcoin’s price has caught my attention, but it doesn’t phase me too much.

In the last day, Bitcoin (BTC) has seen a substantial drop, dipping below the crucial $70,000 level. Reaching a high of $73,620 on Tuesday, it has since decreased by around 5.7%, touching an intraday low of $68,830 on Friday. Experts attribute this fall to several significant causes.

#1 Risk-Off Sentiment Ahead of US Election

The fall in Bitcoin’s price seems to align with a shrinking gap between the odds of former President Donald Trump and Vice President Kamala Harris, the Democratic candidate, as predicted by betting markets like Polymarket and Kalshi. Bitcoin is often referred to as a “Trump hedge” because of the president’s strong support for the cryptocurrency industry.

If re-elected, Donald Trump has suggested creating a “strategic Bitcoin depository” within the United States. Addressing the Bitcoin 2024 Conference, he detailed his intention to maintain all Bitcoins owned or obtained by the U.S. government for this purpose. This venture is a significant part of his effort to bolster the U.S.’s position as a global leader, with an ultimate goal to make the country the foremost hub for cryptocurrency on Earth.

Last week, as Trump’s advantage over Harris seemed larger, Bitcoin nearly reached its maximum value of $73,777. However, the narrowing of Trump’s lead seems to have led investors to take on less risk, which could be a factor in the recent drop in prices.

crypto analyst HornHairs pointed out that reducing risk prior to elections has historical significance. “Reducing risk in the five to six days leading up to the election occurred in both 2020 and 2016. Subsequently, the price never revisited the lows set the week before the election again. Proceed with caution when deciding what to sell now,” he cautioned through X.

#2 S&P 500 Loses 3-Month Trendline

It’s possible that changes in traditional financial markets, such as the recent drop in the S&P 500 on October 9, might have played a role in shaping Bitcoin’s price fluctuations. This downturn could influence the attitudes of cryptocurrency investors and possibly impact the crypto market as a whole.

Despite significant tech companies such as Apple posting impressive earnings, their stock values have dropped instead. The Kobeissi Letter’s analysts commented, “Another tech giant reporting above-expectation earnings but trading lower,” also pointing out that technology stocks are experiencing broad selling, even though Meta, Amazon, and Apple surpassed their earnings projections. They further suggested that the markets might be taking precautions ahead of next week’s election, anticipating increased volatility.

Marco Johanning, a crypto trader, expressed worries about the S&P 500 possibly breaking its three-month trajectory. “Yesterday’s drop seems to indicate a potential selloff leading up to the US election on Tuesday, which might cause short-term price decreases. The ideal rebound point is the seven-month trendline (represented by blue). I hope the price doesn’t fall below the significant level around 63k (marked in red),” he communicated through X.

#3 Leverage Flush Out

Reducing or reversing highly-leveraged investments in the markets has played a role in Bitcoin’s drop in value as well. This market adjustment seems like a normal reaction to an overstretch that was caused by excessive leveraging.

crypto expert Miles Deutscher observed: “This dip is typical (and foreseeable). The market appeared overstretched recently, with much of its movement fueled by leverage. I’m not heavily investing at this time because it hasn’t reached a full collapse yet—I’ll wait for such a day near the election. However, it could be a good Day of Continuous Accumulation (DCA) for certain coins.

As a researcher, I’d rephrase it as: Austin Reid, FalconX’s Global Head of Revenue & Business, highlighted that the crypto derivatives market was experiencing an unprecedented surge prior to the election, with combined futures open interest for Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) surpassing $50 billion for the first time.

According to on-chain analyst Axel Adler Jr, there was a decrease of approximately $2.1 billion in open interest, suggesting a substantial reduction in leveraged positions.

As per information from Coinglass, within the last 24 hours, a staggering 93,864 traders faced liquidation, totaling approximately $286.73 million. The single biggest liquidation order took place on Binance‘s BTCUSDT pair, worth about $11.26 million. For Bitcoin specifically, long positions amounting to $81.38 million were terminated—the highest since October 1.

At press time, BTC traded at $69,446.

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2024-11-01 17:11