Why Did Bitcoin Drop 25% in Just Two Weeks?

Bitcoin “fell dramatically in late April,” writes The Street, “sinking from its mid-month high of around $64,000” to Sunday’s current price of $47,600 — a drop of over 25% in less than two weeks.

So this week the Street spoke to Bobby Ong, the chief operating officer at the cryptocurrency data aggregator CoinGecko, asking “Was that just par for the course — normal volatility — of something else?

Ong: The recent bloodbath on April 18 saw a record of approximately $9.77 billion worth of futures contracts liquidated in just 24 hours. There was already a massive amount of leverage in the market in anticipation of the Coinbase initial public offering. The excitement of having the first crypto company IPO also led bitcoin’s price to hit a new all-time high of $64,804.

However, the direct listing of Coinbase also had a lukewarm reception from stock investors. More recently, there was a lot of fear and uncertainty spreading on social media due to various factors, including (rumors of) the U.S. Treasury taking legal action against certain financial institutions for money laundering, which turned out to be false information. Other than that, CNBC was recirculating news about the crypto ban in India, Turkey banning crypto payments, President Biden proposing a higher capital gains tax, and China bitcoin miners losing power.

The selloff happened during the weekend when there were thinner order books. With high leverage and thin order books, even a small decrease in price will trigger a sharp drawdown and cause a downward spiral in price.

Naturally, the market also needs to correct itself, because there were many over-leveraged traders. It is also important to note that bitcoin options expire towards the end of every month, which usually causes increased volatility in the last week of each month.

TheStreet: Do you see the decline as a chance for people to get into it at a cheaper price?

Ong: It depends on that person and their goals. The profiles of buyers today are very different before, when it was mostly libertarians. Today. it’s U.S. institutions, and soon it will be governments.

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Mainly following are the two reasons for the contribution of this Drop

  1. Bitcoin Miners Power Outage in China.(refer below article)
    https://www.independent.co.uk/life-style/gadgets-and-tech/bitcoin-price-china-power-cut-b1834446.html

  2. Turkey crypto scam/crash(refer below article)
    https://www.cnbc.com/2021/04/23/bitcoin-btc-ceo-of-turkish-cryptocurrency-exchange-thodex-missing.html

It’s a giant fraud , easily trackable and very bad for environment.

https://www.bloomberg.com/opinion/articles/2021-01-26/is-bitcoin-mining-worth-the-environmental-cost

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