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Here's Key Reason Why Bitcoin (BTC) Fell Below $30,000

Tue, 07/18/2023 - 14:49
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Tomiwabold Olajide
BTC was worth $29,797 at press time
Here's Key Reason Why Bitcoin (BTC) Fell Below $30,000
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Bitcoin (BTC) slipped below the $30,000 mark as the cryptocurrency market shed gains accrued in the prior week.

Last Thursday, Bitcoin surged past $31,700 after a U.S. judge determined that exchange-traded XRP tokens were not securities.

On Tuesday, the price of Bitcoin dropped as low as $29,683, its lowest point since late June. BTC was worth $29,797 at the time of writing, down 1.24% over the previous 24 hours.

However, the loss of liquidity on the crypto market might be a key culprit in Bitcoin's drop and that of the rest of the market.

Wu Blockchain shares an interesting analysis of Bitcoin's price action, as well as that of the rest of the market. It was noted that cryptocurrencies met a V-shaped market today, with BTC plunging below $29,700 and ETH below $1,875, before recovering in a V-shaped manner during Asian trading hours.

The analysis highlighted that the crypto market is currently losing liquidity, which makes it vulnerable to spikes and V-shaped moves because it only takes a small amount of momentum to cause price movements on a large scale.

Bitcoin (BTC) Now Extremely Squeezed, On-chain Data Hints at Significance

This year, crypto "market depth" has been quite low. The term "market depth" describes a market's capacity to absorb reasonably sizable buy and sell orders.

Prices can fluctuate significantly up or down when market depth is minimal, and large players place orders to buy or sell digital currencies, even if the orders are not very large.

Why is Bitcoin price stuck?

On-chain analytics firm Cryptoquant, in a recent Quicktake post, gives three reasons why the Bitcoin price has failed to move of late.

Short-term holders (STHs) have been actively selling off their Bitcoin reserves, exerting significant pressure on the market since April. Miners are also actively selling their Bitcoin reserves ahead of the Bitcoin halving event, which is about 282 days away.

Third, the volatility index, which considers price volatility, inflow/outflow (funds flow into and out of the market) and net taker ratio (buyer-seller ratio), demonstrates a significant decrease in market activity starting in April this year.

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About the author

Tomiwabold is a cryptocurrency analyst and an experienced technical analyst. He pays close attention to cryptocurrency research, conducting comprehensive price analysis and exchanging predictions of estimated market trends. Tomiwabold earned his degree at the University of Lagos.