BTC fell 15% last week – what's going on?

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Contents

Theories to explain Bitcoin’s recent price crash Convolutional volatility Forced Liquidations Bitcoin price prediction BTC alternative Read also:

The price of Bitcoin (BTC) has taken a terrible downfall over the past four days after a 15% slump. The decline sent the flagship cryptocurrency to mid-June lows of around $25,174. Also, BTC lost a crucial support level during the fall, which had kept the king of crypto bullish from a general outlook. Efforts to restore the aforementioned vital support are underway, but on-chain metrics such as volatility and liquidations point to a bleak outlook. This could fuel a miner-induced sell-off unless things improve.

Theories to explain Bitcoin’s recent price crash

Several theories have emerged to explain the recent drop in Bitcoin price, but two stand out. Brief explanations for the two are as follows.

Convolutional volatility

The Bitcoin price, in particular, has registered multiple moving instances in a tight consolidation. First, it was before the 2023 rally established a high of $31,500 for BTC. This was exacerbated by broader macroeconomic conditions and a move within a range, pushing the volatility score to an all-time low.

BTC volatility — Volatility index for BTC

Bitcoin’s price has recorded many sequences of low volatility throughout its 13-year tenure. With every violation of every move, an explosive action followed.

Forced Liquidations

Forced liquidations are the second theory explaining the recent dip, and it mostly points to rumors that SpaceX is selling its BTC holdings. Citing an excerpt from a QCP Capital publication:

Major BTC and ETH gamma-related perp liquidations on options exchanges Deribit and OKX, which together accounted for an outsized 50% of all liquidation flows.

Bitcoin price prediction

Bitcoin price shows massive efforts to move back up but momentum remains terrible, or in the simplest terms, terrible. The Relative Strength Index (RSI) is at 19, while the Awesome Oscillator’s histogram bars show huge amounts of red. This means that the bears still have a very tight grip on BTC prices.

Therefore, unless momentum picks up, Bitcoin price could break below the immediate $25,174 support level and reach a new low. In the severe case, it could shift 25% to the $20,000 psychological level.

BTC price — TradingView: BTC/USDT 1-day chart

Industry researchers, investors and traders agree that the market needs positive momentum to catalyze an uptrend. If this happens, Bitcoin’s price could move north and recover the ground lost in the recent crash. Potentially it could recover over $28,738.

From the current standpoint, the most likely impulse would be for the US SEC to approve a spot BTC ETF. However, the chances of such an outcome remain bleak, with an ETH ETF approval showing more promise, the Wall Street Journal reported.

In a very bullish case, the price could move above the $30,664 resistance level to reach a new range high, possibly above the $31,804 level.

BTC alternative

As the Bitcoin price works out a recovery, consider WSM, the ticker for the Wall Street Memes ecosystem. The WSM token is an ERC-20 token running on the Ethereum blockchain with a maximum supply of two billion. It is one of the most important communities in the cryptocurrency ecosystem, with one of the largest social engagements. The aim is to legitimize loyal supporters of the movement.

WSM Token is in the pre-sale phase and is offered in exchange for $0.0337 per token.