Markets
Why is the Cryptocurrency Market Down Today? Here are the Top 5 Reasons
The cryptocurrency market experienced a third consecutive day of negative price activity, reflecting the growing negative sentiment. The overall market cap fell by $90 billion to $2.17 trillion, marking a loss of 3.67% over the past day. Bitcointhe market leader, saw a 3.27% decline to $58,067.63 in 24 hours, having previously fallen 3.6% to $60,490 on July 1 due to selling pressure and shares of the German government.
The pressing question on everyone’s mind is whether Bitcoin has embarked on a long-term downtrend or whether this is just a temporary setback.
According to cryptocurrency analyst Wise Advice, the market is in decline for a number of reasons, including mass withdrawals, liquidations, mining activity, government actions and market sentiment indicators.
Why are cryptocurrencies falling?
Large whale outings and movements
Another exit hit the BTC ETF On July 3, a crypto whale sold millions of dollars worth of coins in altcoins, suffering significant losses. Leading blockchain analytics tool Lookonchain said that this whale or institution sold 3.13 million LDO tokens for $5.77 million, 49,771 AAVE tokens worth $4.54 million, 269,177 UNI tokens worth $2.41 million, and 250,969 FXS tokens worth $708,000.
Growing settlement
The market has also been hit hard by increased liquidations. Just yesterday, BTC liquidations reached $14 million, but today, that number has risen to $36 million. These large-scale liquidations have triggered widespread sell-offs, further driving down BTC price.
Miners’ struggles
Currently, BTC miner capitulation is among the main factors contributing to the price drop. The mining community is under pressure due to a persistently low hash rate, leading to dwindling profits. Consequently, many miners are selling their BTC to maintain operations or switching to other proof-of-work tokens to sustain profitability.
Government actions fuel panic
The German government’s actions have heightened market fears. Recently, the government has been moving BTC, causing panic among investors who are preemptively selling their holdings in anticipation of potential market impacts, despite the government not having sold any coins yet.
Bearish market sentiment
Overall market sentiment has turned bearish. A chart tracking Bitcoin flows on spot and derivatives exchanges currently shows a negative outlook, with red indicating bearish sentiment and green indicating bullish sentiment.
Furthermore, Bitcoin lost several key support levels in June, suggesting a bearish trend in the medium term. The focus now is on holding support above $60,000 as the weekly Relative Strength Index (RSI) approaches 50. Analysts warn that if the bearish sentiment continues, Bitcoin could drop to around $48,000 before potentially recovering, marking a critical test of its resilience amid ongoing market turmoil.
Read too: Here’s How Low Bitcoin Price Can Go? Top Analyst Weighs In
Where do you see the crypto market heading? Up or down? Let’s hear your predictions!