Skip to content

Reasons for the decline of BTC, and why is it essential for Bitcoin investors to understand now

Bitcoin declined by more than 10% last week. Investors need to understand the reasons that led to the dip. It will help them
Bitcoin declined by more than 10% last week. Investors need to understand the reasons that led to the dip. It will help them make proper decisions and not panic in a volatile market.

The week that ended on Sunday was the first time in ten weeks that Bitcoin witnessed a massive fall. BTCUSD declined by 10.7% during the last week. The week prior, Bitcoin gained more than 15%.

We have all heard in recent times, several analysts claiming Bitcoin to be a safe-haven. On certain occasions, it has proved the claim too. However, with such swings both towards the highs and the lows, does it justify as a safety net? Perhaps not!

Problems faced by BTC currently

  1. On May 11, BTC concluded its third halving. The number of Bitcoin rewards to miners got reduced to 6.25 BTC. It forced several miners out of work. People with older hardware that require plentiful electrical supplies were not profitable anymore.
  2. BTC is subjected to a lot of market manipulation. The exchanges offer incredible margins and then make money even if investors lose. On top of that, there are several market whales. These whales have sufficiently large holdings to cause market manipulations.

The mentioned above are general reasons that are negatively impacting the BTCUSD. Apart from these reasons, there are three precise reasons which led to the decline of BTC last week.

Bitcoin’s dip last week was caused by:

  • Before last week, BTCUSD crossed $10,000. This region being a psychological barrier, people started selling off their holdings.
  • Every marketplace matches a buyer with a seller. In the case of BTCUSD, the number of sellers wishing to sell their holdings increased last week, and the number of buyers got less. In this scenario, the most obvious thing is for the BTC prices to plummet.
Bitcoin declined by more than 10% last week. Investors need to understand the reasons that led to the dip. It will help them make proper decisions and not panic in a volatile market.

Source: TradingView.com

  • If we look at the BTCUSD daily charts, we can see that the traded volume is pretty low. It indicates a decrease in liquidity in the Bitcoin marketplace.

Latest