What’s going on with crypto? Crypto down this morning, shedding 5% of the total market cap. As Bitcoin drops,
Price
Trading volume in 24h
Last 7d price movement
, here are 3 reasons why.
The crypto market is bleeding.
Bitcoin, Ethereum, and other top altcoins are down in the past day, losing a ballpark 3%.
Looking at their respective performances over the last six months, it is clear why market participants are cautious.
With Bitcoin failing to reclaim $70,000 and Ethereum fast-falling despite the launch of spot ETFs, traders are on the sidelines, preserving their capital and strategizing.
As long as BTC remains below $60,000, the short-term trend favors bears.
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Any dip below $56,000 could spark a sell-off, pushing the world’s most valuable coin below August lows in a painful bear-trending continuation formation.
If it does happen, it would wreak havoc across the crypto scene. Less liquid altcoins will likely post double-digit losses, extending losses.
Should this be the case, it won’t be surprising for Ethereum to lose $2,000 and Solana to tank below $100.
In turn, sentiment will slump, further forcing capital from the market.
Presently, Coingecko data shows that the total market cap is down 5% to $2.08 trillion.
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Here’s Why Crypto And Bitcoin Prices Are Down
As mentioned earlier, the market will bleed more if Bitcoin extends losses below the local support, marking July lows.
While traders are optimistic, caution prevails because of the following factors:
1. September is Historically Bearish
Bitcoin is in September, a month that has proven unfavorable for bulls.
Last year, prices plunged for the better part of the year before dropping more in September.
Bulls found support in October when it soared, rising to as high as $73,800 in March 2024.
Expanding crypto prices, after September, lifting sentiment, fanning demand across the board.
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The question remains: Will Bitcoin beat the odds this time around?
As things stand, it could be tough for holders. BTC is trading below crucial support levels.
Moreover, the short and medium-term trend favors sellers following the sell-off from May to early August 2024.
2. Stablecoin Flow
Stablecoins are conduits in crypto.
Besides preserving capital during turmoil, they are channels for users to invest in Bitcoin and other cryptocurrencies.
One analyst, citing Glassnode data, notes that more capital is flowing to stablecoins than the world’s most valuable coin.
Technically, this is bullish because traders could be ready to splash on crypto.
However, it also signals apprehensiveness and traders who are cautious and unsure of what happens next.
This development is neutral, but how prices trend in the short term will determine the immediate trajectory.
3. Open Interest Falling
As prices fall, open interest across Bitcoin futures platforms continues to fall.
At press time, it stands at $30 billion, down from $36 billion recorded on August 26, according to Coinglass data.
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This means that leveraged traders are closing their positions, or their stop losses have been hit.
While this development might mean confidence is fading, it is also positive for the coin.
As speculators are flushed, demand via the spot market will strengthen, helping lift prices.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
