Bitcoin continues to decline after failing to sustain the recovery fueled by tech stock gains, especially following the release of unstable U.S. employment data and a drop in expectations for rate cuts from the Fed. These factors pushed the price to around eighty-five thousand seven hundred dollars, the lowest level since April.
Despite the ongoing declines, analysts from JPMorgan and VanEck provided a deeper explanation of what is happening.
What caused the recent drop?
JPMorgan sees the current correction in the cryptocurrency market as primarily driven by a massive outflow of liquidity from Spot Bitcoin and Ethereum ETFs. Retail investors sold nearly four billion dollars in November, the largest outflow since February, causing selling pressure to outweigh any recovery attempts.
Can Bitcoin recover?
According to VanEck, the current sales are coming from medium-term holders, especially those who have held the currency for three to five years, while long-term holders remain steady and show no signs of capitulation. The decline in perpetual futures contracts and reduced funding also indicates that the market is entering a reset phase, which typically precedes a medium-term recovery wave.
Summary
The market is undergoing a real correction, but the absence of capitulation among major investors, along with the rotation of positions among traders, makes recovery possible once economic and financial factors stabilize.
#Bitcoin #ضرار_الحضري