The crypto market has been thrown into turmoil. In just a few weeks, Bitcoin plummeted from record highs to below $90,000. While its price had surpassed $126,000 in early October, it has now lost more than a quarter of its value. What caused the world’s largest cryptocurrency to suddenly plummet? Let’s explain it simply.
Where did Bitcoin’s fall begin
Everything was going well Bitcoin was hitting record highs, and the crypto market was ecstatic. Donald Trump’s return and his crypto-friendly policies gave investors hope. In May, Bitcoin surpassed $100,000 for the first time and then set a new record of $126,251 in October. But then things suddenly changed. After weak US job data, the market expected the Federal Reserve to cut interest rates. The dollar weakened, people flocked to crypto and Bitcoin continued to rise.
But then Trump raised fears of a trade war with China. Fear spread through the market, and investors began withdrawing money from risky assets. Volatile assets like Bitcoin were the first to be affected.
What is the real reason for the drop below $90,000
Bitcoin’s sharp decline isn’t solely due to trade war fears, but rather the combined effect of several factors. The biggest shock came when over $20 billion worth of Bitcoin trades were suddenly liquidated. Many large investors, fearing huge losses, placed sell orders, further deepening the market’s fear. Other coins, like Dogecoin, also began to fall, further fueling panic in the crypto market.
Meanwhile, the release of economic data was halted due to the longest government shutdown in the US. When the market lacks economic data, insecurity increases. In such times, investors always choose safe options gold, the dollar, or government bonds. Risky digital assets like Bitcoin immediately come under pressure.
The Fed’s decision added to the difficulties.
Bitcoin The market had been expecting the Fed to cut interest rates in December, but some officials indicated that this might not happen. This strengthened the dollar, sending both the stock market and crypto down. According to eToro analyst Simon Peters, if interest rates are reduced in December, Bitcoin could rebound but the market is currently in a state of fear.
What will happen next for Bitcoin
Bitcoin Crypto experts say this decline isn’t just a price fluctuation, but a sign of deeper market anxiety. Many investors who were previously hurt by the sharp price drop are now very cautious. A major problem is that the crypto market remains highly volatile, keeping ordinary investors and institutions away.
Bitcoin Despite this, regulators around the world are becoming more open to crypto than ever before. Europe has implemented MiCA regulations, and the UK may introduce new regulations by 2026. This indicates that the crypto market may become more organized in the future.
Bitcoin emerged as an independent economic model after the 2008 financial crisis. In a white paper written by Satoshi Nakamoto, it was envisioned as an alternative to the traditional banking system. Today, Bitcoin’s core purpose remains the same but its volatility continues to be a cause for concern.
FAQs
Q1. Will Bitcoin fall further?
The market is heavily dependent on interest rates and global politics. A stable environment could accelerate recovery.
Q2. Is this a good time to buy?
This depends on your risk tolerance. Cryptocurrency fluctuations are very high.
Q3. Do trade wars have such an impact on Bitcoin?
Yes. Whenever economic uncertainty increases in a country, people sell riskier assets.
Q4. Could a Fed rate cut cause Bitcoin to rise again?
Most experts believe that a rate cut will provide relief to Bitcoin.
Disclaimer: This article is for informational and educational purposes only. Cryptocurrencies are highly volatile. Please consult a financial advisor before making any investments.
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