Bitcoin, the world’s most traded cryptocurrency, has been experiencing a downward trend in the past few hours, dropping below $28,000 for the first time since August 31. The price decline coincides with a bearish divergence on the daily RSI, indicating a loss of momentum and a possible reversal. Bitcoin is currently trading at $27,534, down 1.34% in the last 24 hours1.
Some
analysts attribute the price drop to the ongoing trial of Sam Bankman-Fried, the founder and CEO of FTX, one of the largest crypto exchanges in the world. Bankman-Fried is accused of market manipulation, fraud, and insider trading by the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The trial, which started on October 11, has been drawing a lot of attention from the crypto community and the media2.
Others suggest that the price drop is a result of profit-taking by investors who bought Bitcoin at lower prices during the summer dip. According to data from Glassnode, the number of Bitcoin addresses holding more than 1,000 BTC has decreased by 2.3% since September 1, indicating that some whales have been selling their holdings3. Additionally, data from CryptoQuant shows that the net inflow of Bitcoin to exchanges has increased by 28.7% in the last week, signaling a higher selling pressure4.
However, not all is gloomy for Bitcoin. Some experts believe that the price drop is a healthy correction that will pave the way for a new rally. They point out that Bitcoin is still holding above its 200-day moving average, which is a key support level and a bullish indicator3. They also note that Bitcoin’s fundamentals remain strong, as its network hash rate has recovered to pre-China ban levels and its adoption continues to grow worldwide5.
Moreover, some positive news could boost Bitcoin’s sentiment in the near future. For instance, Russia’s President Vladimir Putin recently said that the U.S. dollar-based global financial system is collapsing and that central bank digital currencies (CBDCs) will become the basis of payments6. This could imply that Russia is open to embracing Bitcoin and other cryptocurrencies as alternatives to the dollar. Additionally, Robert Kennedy Jr., a prominent environmental activist and nephew of former U.S. President John F. Kennedy, said that he will end the White House war on Bitcoin if he runs for president in 2024. He also said that we need a “freedom currency” that the government can’t control7.
In conclusion, Bitcoin is facing some challenges in the short term, but its long-term outlook remains optimistic. As always, investors should be cautious and do their own research before making any decisions.