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The price of Bitcoin (BTC) experienced a significant decline in the last 24 hours, falling below the important threshold of $70,000. After reaching a high of $73,620 on Tuesday, the cryptocurrency fell about 5.7%, hitting a low of $68,830 on Friday. Analysts point to several key factors behind this decline:
#1 Risk Aversion Sentiment Ahead of the US Election
The timing of Bitcoin’s price drop coincides with former President Donald Trump’s narrowing lead over Democratic candidate Kamala Harris on prediction markets like Polymarket and Kalshi, where users bet on election results. Bitcoin is considered “Trump’s hedge” due to the former president’s strong advocacy in the field of cryptocurrency.
Donald Trump has proposed establishing a “strategic Bitcoin repository” in the United States if he is re-elected. Speaking at the Bitcoin Conference 2024, he revealed plans to store all Bitcoin owned or acquired by the US government as part of this database. The move is a key part of his campaign to strengthen the US as a leader, aiming to make the country the “crypto capital of the planet.”
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Earlier in the week, when Trump’s lead over Harris was at its strongest, Bitcoin hit an all-time high of $73,777. Trump’s shrinking leadership appears to have prompted investors to take a risk-off stance, which has contributed to the price decline.
Crypto analyst HornHairs noted that the mockery before the election has precedent. “Election gossip 5-6 days before it happened happened in both 2020 and 2016. Price continued to not check the lows set a week before the election again. Be careful what you’re selling here,” he said of X.
#2 S&P 500 Loses 3-Month Trend Line
The correlation between Bitcoin and traditional financial markets may also influence BTC price movements. The S&P 500 fell to its lowest level since October 9, which could affect investor sentiment in the crypto space.
Kobeissi Letter analysts noted that despite major technology companies such as Apple reporting strong earnings, their share prices have fallen. “There is another tech giant to beat earnings but trade lower,” they noted, adding that tech stocks faced a broad sell-off as Meta, Amazon, and Apple exceeded earnings expectations. They added, It appears that markets are reducing risk ahead of next week’s election. Brace for volatility. “
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Crypto trader Marco Johanning highlighted concerns about the S&P 500 losing its three-month trendline. “Since the S&P 500 lost its 3-month trendline yesterday, it looks like it will sell off ahead of Tuesday’s US election and lower prices in the short term. The absolute level of the jump is the 7-month trendline (blue). I don’t want to see prices below POC level/key around 63k (red),” wrote X.
#3 Use Flush Out
A significant release of available positions in the market also contributed to the decline in the price of Bitcoin. Market correction appears to be a healthy response to energy-driven overexpansion.
Noted crypto analyst Miles Deutscher commented: “This pullback is normal (and expected). The market has looked stretched over the past few days, and is largely driven by energy. Still not a heavy buy as it is not yet a full cascade – will wait for one of those days closer to the election. Not a bad day for DCA for some coins. “
Austin Reid, Global Head of Income and Business at crypto prime brokerage FalconX, revealed that the crypto derivatives market was “on fire” before the election, with open futures for BTC, ETH, and SOL crossing the mark of 50 billion dollars. first of all.
On-chain analyst Axel Adler Jr reported that open interest was reduced by 2.1 billion dollars, which means there is a significant profit.
According to data from Coinglass, in the last 24 hours, 93,864 traders were eliminated, with a total loss of $286.73 million. The largest liquidation order occurred on Binance’s BTCUSDT pair, valued at $11.26 million. In Bitcoin alone, $81.38 million in long positions were liquidated—the largest amount since October 1.
At press time, BTC traded at $69,446.
The featured image was created with DALL.E, a chart from TradingView.com
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