Why Is Bitcoin Falling Today? – Forbes Advisor

Why Is Bitcoin Falling Today?  – Forbes Advisor
Why Is Bitcoin Falling Today?  – Forbes Advisor

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Bitcoin (BTC) and other cryptocurrencies saw sharp declines in morning trading today. While BTC is still up nearly 50% year-to-date, the world’s oldest cryptocurrency has dropped more than 6% in the past 24 hours.

This means that Bitcoin, which soared last week to a new all-time high above $73,000, has fallen back below $63,000. This is a psychological hurdle that has spent almost the entire «crypto winter» of 2022-23 trying to overcome.

Ethereum (ETH), the world’s leading altcoin, also fell by more than 7% in the last 24 hours, sending the price of ETH back down to $3,200. It was also an obstacle that Ethereum spent almost two years trying to overcome after the arrival of crypto winter in April 2022.

The fall in the price of Bitcoin has affected almost the entire cryptosphere. Other leading altcoins are also down. Solana (SOL) is down 11%. BNB Coin (BNB) is down 6%. Cardano (ADA) is down more than 5% and Avalanche (AVAX) is down 4%.

The only major altcoin not feeling a dramatic effect from BTC’s decline today is XRP (XRP), which is down less than 1%.

Why Is Bitcoin Falling Today?

The exact cause of Bitcoin’s decline over the past 24 hours is not entirely clear, but it may have been triggered by a sudden crash on crypto exchange BitMEX, where a massive sell order sent the world’s oldest cryptocurrency briefly hitting a low of $8,900. However, other major exchanges around the world kept BTC prices above $60,000.

Since the overnight crash, BTC has steadily lost value, and the overall market cap of the broader crypto market has fallen by more than 8%. The reason for this broader decline is most likely because the world’s altcoins are simply following Bitcoin’s lead.

Bitcoin has been on a serious rise since last November. It climbed from $34,000 in late October to more than $73,000 last week.

After the U.S. Securities and Exchange Commission approved 11 new spot bitcoin exchange-traded funds, or ETFs, on January 10, bitcoin has been on an upward trend, gaining more than 50% this year alone.

ETFs, like mutual funds, are baskets of securities that investors can trade as a single investment. However, unlike mutual funds, ETFs are traded directly on stock exchanges throughout the market day.

Cryptocurrencies themselves trade 24/7 because, unlike stocks and commodities, the crypto market is not a regulated exchange. This happens in a decentralized network of computers.

Bitcoin ETFs—whether spot or futures-focused—trade only during market hours.

A spot ETF differs from a futures ETF in that a spot ETF tracks the current price of the underlying asset, while a futures ETF tracks potential future prices of the underlying asset.

Futures ETFs deal in trading futures, which are complex derivatives best suited for direct trading only by experienced investors.

After the recent meteoric rise in cryptocurrencies, many investors have most likely considered or actually engaged in profit taking. This may have fueled today’s BTC price decline.

Is cryptocurrency a safe investment?

Cryptocurrency markets saw a huge resurgence in 2023, with Bitcoin ending the year up 156%. According to the opinions of many investors, this recovery ended the crypto winter of 2022, which was illustrated by the rapid collapse of the crypto exchange FTX in November 2022.

As a result of the FTX collapse and other circumstances, US regulators cracked down on exchanges and other companies trading and creating cryptocurrencies.

The chairman of the SEC, Gary Gensler, has said in the past that his agency believes that most cryptocurrencies are actually securities and therefore fall within the scope of numerous pre-existing rules and legal precedents.

This claim was further made in SEC filings against a handful of crypto exchanges and companies – including Binance and Coinbase – alleging that these entities engaged in the unlicensed sale and transfer of securities.

However, Gensler and the SEC also said that bitcoin itself is likely a commodity, not a security, and should be regulated by the CFTC, not the SEC.

With the recent price declines, Bitcoin’s current price is around $63,000, which is more than 15% below its new all-time high of $73,000 set last week.

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