Main reasons for the decline of cryptocurrencies
1. Massive sell-off from 'Whales' causing a 'Flash Crash'
• One of the major investors sold about 24,000 Bitcoin (equivalent to billions of dollars), causing a sudden rapid price crash and establishing support at levels around ~110,000 dollars.
• This sell-off triggered a series of forced liquidations, leading to the closure of long positions worth over 900 million dollars, further increasing pressure on the market.
2. Technical Breakdown
• Bitcoin prices fell below the 100-day simple moving average and below the 'Ichimoku Cloud', a negative technical indicator suggesting a price trend reversal towards decline.
3. Liquidity withdrawal and weak demand
• Outflow of capital from ETFs linked to cryptocurrencies, and a reduction in activity on networks left the market fragile and easy to manipulate.
4. Profit-taking after a previous rise
• After a rally caused by optimistic statements about a potential interest rate cut from the Federal Reserve, investors began to take profits, leading to a price correction.
5. Macro Pressure
• Despite hints of interest rate cuts, the market continues to suffer from economic pressures such as rising inflation and weak confidence. This weighed heavily on the demand for high-risk assets like cryptocurrencies.
6. More forced liquidations
• The markets were affected by rapid identities, as the price drop resulted in liquidations exceeding 900 million dollars, mostly against long speculative positions, which accelerated the price decline.
7. Potential seasonal factor: September typically underperforms
• Historical data indicates that September typically sees negative performance for Bitcoin during bull market periods, suggesting a seasonal psychological and technical factor against prices.
