After another drop on Friday, Bitcoin BTC closes below USD 54,000, a first since December 2021. While the downward crossing of this threshold has already been tested in recent weeks, a daily close below is a first since December 2021. Let's take stock of these figures.
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| Bitcoin Closes Below USD 54,000. Source: TradingVeiw |
Causes Behind Bitcoin Closes Below USD 54,000 for The First Since 2021
On Friday, Bitcoin (BTC) continued its downward trend, so much so that the day ended below $54,000. While this is not the first time that such a threshold has been crossed downwards in recent weeks, it is nevertheless the first time that the asset has recorded this price at the close of the day since December 3, 2021.
For their part, other assets are not doing any better, notably with ETH at $2,240, down sharply by 6.7%. Across the entire crypto ecosystem, liquidations generated on centralized platforms thus amount to nearly $293 million, of which more than 75% concern long positions.
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| Causes Behind Bitcoin Closes Below USD 54,000 |
While there are no particularly specific reasons inherent to the ecosystem to explain the decline, some answers can always be found in the fears surrounding the American economy.
Concerns about the American economy
For example, employment figures disappointed when they were announced on Friday, with the creation of 142,000 non-farm jobs in August, compared to 165,000 expected.
Regarding the rate cut expected on September 18, the market now expects 70% to a level reduced to between 500 and 525 basis points and 30% to a range of 475 to 500 basis points.
This economic situation has also caused a drop of 1.73% on the S&P 500 and 2.69% on the NASDAQ. Some stocks fell more than others, notably Meta down 3.21% or NVIDIA with 4.9%.
While the cryptocurrency market is not supposed to be impacted by the global economy at first glance, this is without taking into account the tendency of institutional investors to withdraw from asset classes considered risky during turbulent periods.
After such a drop, the $50,000 area will now have to be particularly monitored.
What is causing the Bitcoin drop?
The steep drop in Bitcoin prices is being caused by a number of factors, including the US Federal Reserve's expected rate cut. The decline is further exacerbated by a decline in the S&P 500, which has traditionally had an impact on cryptocurrency markets.
What is causing the drop in crypto?
In short, there are fewer users, and the average transaction size on the base layer has decreased. Finally, the recent decline in Bitcoin's price can be related to the US Fed's lessened possibility of completely implementing a 0.50% or 0.75% interest rate cut before the end of the year.
What is the reason behind fall of cryptocurrency?
Unexpected macroeconomic headwinds and the recent introduction of Spot ETH ETFs have caused price volatility in the whole cryptocurrency market, including Bitcoin. Let's examine some additional elements that have influenced the volatility of Bitcoin prices: Spot Ethereum ETFs are approved by the US SEC.
Why has crypto price dropped?
The cryptocurrency sector is going through a serious surrender phase, as Bitcoin and Ethereum are plunging significantly. Economic data, geopolitical threats, political unpredictability, and ETF performance are the main market determinants.
What causes crypto to dump?
There are several causes of dumps. Dumps are believed to be caused by cycles in the cryptocurrency market, or the regular ups and downs of the market over extended periods of time, such as months and years. Many investors and market participants think that Bitcoin follows a typical market cycle that looks something like this: accumulation.