Why is Bitcoin falling into a bear market?
After two months of anchoring around the 30,000 USD mark, the Bitcoin market price continuously went backwards, causing the cryptocurrency market indicator to return to a downtrend.
In the first half of the year, Bitcoin was the investment channel with the highest performance, increasing more than 80% to above 30,000 USD per coin. The cryptocurrency has been trading around the above mark for about two months, pulling CoinDesk's Bitcoin Trend Indicator - an indicator of the coin's trend - pointing to an uptrend. Investors are starting to talk about the end of "crypto winter ," the term they use to describe a period of market decline and gloom.
However, from mid-August until now, CoinDesk's Bitcoin Trend Indicator began to put into reverse gear when the coin's market price fluctuated greatly. The world's largest cryptocurrency was pulled back to around the $26,000 mark in the second half of August. By the end of the month, Bitcoin inched up to $28,000 but quickly lost value. Since the beginning of September until now, this digital currency has only traded around 25,000-26,000 USD per coin, sometimes reaching its lowest level in 6 months.
CoinDesk's Bitcoin trend indicator is back close to the floor level, which means a downtrend. Data compiled by Bloomberg also shows that metrics used to measure price fluctuations of cryptocurrencies generally tend to decrease.
According to CoinDesk , the cryptocurrency market in general is negatively affected by the information that the US Securities Commission (SEC) decided to delay decisions on applications to open Bitcoin ETF funds until October. These funds include two asset management giants BlackRock and Fidelity, among others.
At the same time, Saudi Arabia and Russia announced to extend the order to cut oil production for another three months, lasting until December. This information caused WTI crude oil prices to increase at the strongest rate since November 2022. . According to Goldman Sachs, if these two countries continue to tighten supply, oil prices could rise to 107 USD - equivalent to the beginning of the war in Ukraine.
Rising oil prices lead to higher inflation and prolong the rise in interest rates. In a high interest rate environment, risky assets such as Bitcoin and cryptocurrencies in general, become picky for holders.
Forbes further explained that this downtrend is due to the inherent characteristics of Bitcoin and digital currencies. This market often fluctuates due to unpredictable macroeconomic difficulties and recent instability in the US banking system. In addition, the cryptocurrency market price is also influenced by many other factors such as the post-tension effect between Russia and Ukraine, inflation concerns in developed countries, interest rate increases in the US and UK and the remnants of the crisis. collapse of the world's largest currency exchange FTX.
"The above factors cause Bitcoin prices to fluctuate throughout. They also play an important role in disturbing the mood of investors," Forbes stated.
Although investors are talking about the end of the "crypto winter", the internal nature of this market still has many uncertainties. According to Bloomberg , trading volume on Coinbase has dropped sharply this year. Not only individual users, the transaction volume of organizations also decreased by 54% in the second quarter over the same period. Coinbase explains this is a general trend when market capitalization decreases, the average price of tokens is low.
After coming into the sights of US regulators, Binance also fell into a similar situation. Statistics from data provider Kaiko show that in the US, Binance's market share has decreased from 27% in April to more than 1% at the end of June. In Europe, this exchange also continuously encountered turbulence when it was defeated by France. investigation, Belgium and the Netherlands banned operations, Germany has not issued a license.
Unlike the previous period, investor psychology is now quite sensitive to information. This was clearly shown in the recent trading session on August 19. After news of rising US bond interest rates and concerns about the Chinese economy, Bitcoin dropped more than 8% in a few hours and spread to all other digital currencies. Investors fell into panic, leading to the liquidation of more than $1 billion, one of the worst sell-offs this year.
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