Bitcoin’s price has taken a sharp hit, dropping 4% in the past 24 hours and leaving investors worried. The global crypto market lost nearly $99 billion in just 24 hours, bringing the total market cap down to $2.89 trillion. But what is causing this sudden Bitcoin drop? Here’s the key reasons behind the recent market drop.
Uncertainty Over U.S. Government’s Bitcoin Plans
One major reason for Bitcoin’s decline is the significant Bitcoin initially surged to $92,000 following President Trump’s announcement of a U.S. Strategic Bitcoin Reserve. However, the market quickly turned bearish after realizing the executive order did not clarify how the government would acquire more Bitcoin.
The uncertainty surrounding whether the U.S. will buy more Bitcoin or just hold onto its seized BTC has left investors skeptical. Some experts, like Peter Schiff, believe the lack of clear accumulation plans could hurt Bitcoin’s long-term growth.
Bitcoin ETFs See Heavy Outflows
Another reason for Bitcoin’s drop is the significant outflow from Bitcoin spot ETFs. According to Farside data, Bitcoin spot ETFs recorded a massive outflow of $134.3 million. This came right after a day of positive inflows, where Bitcoin ETFs saw $22.1 million entering the market.
Leading the outflows was BlackRock’s iShares Bitcoin Trust (IBIT), which saw a $50.6 million outflow, followed by Grayscale Bitcoin Trust (GBTC) with $34.5 million and Franklin Templeton’s fund with $18 million in outflows.
No other major ETF recorded a net inflow, indicating strong selling pressure from institutional investors.
Market Liquidations Increase Selling Pressure
Apart from the spot Bitcoin ETF Outflow, increasing market liquidations is leading to massive selling pressure. In the last 24 hours, traders lost a total of $531 million, with long traders suffering the most. Long positions accounted for $398.3 million of these liquidations, while short traders faced $133 million in losses.
A total of 152,576 traders were affected by these liquidations, with the largest single liquidation occurring on Bitfinex’s BTC/USDT pair, valued at $15.40 million. As long positions get wiped out, the selling pressure increases, pushing Bitcoin’s price even lower.
Bitcoin Struggles to Hold Key Support
Lastly, bitcoin technical analysis suggests that BTC is struggling to hold its key support level as of now it is trading just below its key support level of $89,041. If it fails to reclaim this level, further declines toward $85,000 or even $82,761 could occur.
However, if Bitcoin manages to flip the $90,800 resistance into support, it could attempt a recovery toward $93,625.
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