Bitcoin experienced a drop below the $58,000 threshold for the first time in more than two months. It was on May 1st when the leading cryptocurrency Bitcoin dropped below the $58,000 mark. This prominent digital asset’s price declined to as low as $57,800, as per CoinMarketCap.
The drop in Bitcoin and the overall cryptocurrency market highlights concerns about the Fed’s decision on the interest rate. However, Bitcoin has since recovered some losses and is currently trading around $58,760.04, a 3.46% decline over the past 24 hours. This drop has led the overall crypto market to decrease by 3.30% in the same period.
The drop in crypto prices is not due to a single factor. However, the Fed’s reluctance to cut interest rates and two consecutive days of net outflows from U.S. spot Bitcoin ETFs may be key reasons. According to Bitcoin ETFs tracker Farside Investors, July 2 saw a net outflow of $13.7 million, following a net inflow of $129.5 million the previous day. On July 3, there was another net outflow of $20.5 million, indicating institutional investors’ concerns about the underlying assets.
Additionally, the Bitcoin drop coincides with the collapse of the Japanese crypto exchange Mt. Gox. which has $8.5 billion scheduled to be distributed to creditors from the start of July.
The Bitcoin drop led to the liquidation of millions of long position holders’ accounts. According to CoilGlass data, $55.18 million in leveraged long Bitcoin positions were liquidated, while $11.94 million in short positions were also liquidated. Similarly, Ethereum leveraged long position holders lost $57.95 million due to the drop in Ethereum’s price.
However, crypto analyst Ali Martinez doubts on effect of the Bitcoin drop. In his X post, he states that either the Bitcoin drop is not over, or those betting against Bitcoin are going to incur significant losses, as the current liquidation is smaller compared to past liquidations of up to $1 billion.
Among the top 5 cryptocurrencies by market capitalization, Solana experienced the biggest percentage loss of 9.14% within 24 hours. As of now, Solana is trading at $135.55, with trading volume up by 34.24% to $3.09 billion. Similarly, Binance Coin, trading at $536.58, saw a drop of 5.32% over the same period.
Meanwhile, the price drop has opened up an opportunity for new investors to join the market. Reflecting this sentiment, the trend of “buy the dip” has surged on social media in the past two days, with the phrase appearing twice as often on Reddit, X, and 4Chan. However, investors need to conduct their research and consider their risk tolerance before making investment decisions.
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