Bitcoin continues to face significant downward pressure, plunging further into bear market territory as it approaches the end of another tumultuous week. The cryptocurrency has recently dipped below the $84,000 mark, pushing it toward what could be its worst monthly performance since 2022. With this decline, Bitcoin is down approximately 33% from its previous all-time high of over $126,000, reflecting a broader downturn across the crypto market, which has erased more than $1 trillion in total value over the past few weeks.
Market analysts attribute the ongoing slump to a combination of factors that have heightened selling activity. Key reasons include margin calls on leveraged positions, an overall bearish market environment, and uncertainty surrounding interest rate cuts.
Alex Kuptsikevich, chief market analyst at FxPro, highlighted the seriousness of the situation, noting that Bitcoin plunged below $83,000 and even fell to $81,000 at one point, starting the day at $88,000. These fluctuations indicate a potential wave of margin calls, which occur when exchanges require traders to add more funds to their accounts after their leveraged positions drop below a certain threshold. When traders are unable to meet these margin calls, exchanges often liquidate their positions to mitigate losses, which in turn exerts additional downward pressure on prices.
Concerns over ongoing forced selling have also been echoed by analysts at Deutsche Bank. They cautioned that with Bitcoin’s value more than 30% below its peak, a resurgence of forced selling could occur as retail investors might find themselves compelled to liquidate other assets to comply with margin calls.
Kuptsikevich pointed out that current market conditions are the most bearish for Bitcoin since the mid-2023 bull cycle commenced. He indicated that a break below the average investor entry price of $82,000 would signal a serious confirmation of the bearish trend that first became apparent in May 2022.
Additionally, the outlook surrounding interest rate cuts remains uncertain, further complicating perspectives on risk assets, including cryptocurrencies. Although expectations for rate cuts increased following remarks from a notable Federal Reserve official, market sentiment remains jittery. Kuptsikevich warned that without a key rate cut by December 10, Bitcoin could hover in the range of $60,000 to $80,000 until the end of the year.
As the situation unfolds, market participants are left grappling with the implications of these financial dynamics amid a turbulent crypto landscape.
