Bitcoin has been looking gloomy this week, with a fall that continued to $106,000. Why can’t the largest cryptocurrency get back on track?
Bitcoin (BTC) continues to fall at the end of the week
This morning, the price of Bitcoin hit $106,300, a drop of 4.4% over the last 24 hours. BTC has failed to find stable ground over the week, losing 12% since last Friday, when it was still above $121,000.
However, the largest cryptocurrency had broken an all-time record just ten days ago, exceeding $126,000 for the first time in its history. But the correction has been brutal since then, with a sharp drop on October 10:
The price of BTC has fallen 14.8% since its ATH. Its market capitalization stands at $2.134 trillion this morning.
How can this sluggish performance be explained?
Several factors combined to cause Bitcoin’s fall. From a macro perspective, the trigger was Donald Trump’s announcement of colossal tariffs on China around October 10. Yesterday, he confirmed that the United States was in a “trade war” with China.
At the same time, there were signs of stress in the traditional banking sector. Regional US banks recently recorded losses due to defaulted commercial loans, which led to a negative reaction from the markets.
Furthermore, the dollar remains strong, which does not encourage investment in risky assets such as cryptocurrencies. From the more limited perspective of the cryptocurrency ecosystem, several trends have also combined. We have seen massive liquidations of highly leveraged long positions, which has forced sales.
Another factor behind the sharp decline is that BTC ETFs, which had been performing well until then, showed high net outflows, which also exacerbated the effects.
All of this combined to send the price of BTC to $106,000 this morning. This raises the question: will it cross the psychological threshold of $100,000 again? The geopolitical situation will certainly help to answer this question. Bitcoin does not seem to be the safe haven asset that it was hoped for at this stage, unlike gold, which has been hitting new highs for several months.
