Why has Bitcoin recently declined?
The reasons for Bitcoin's recent correction mainly focus on the following categories of factors:
1. Investors lock in profits
Bitcoin reached an all-time high of approximately $124,000 last week, leading many investors to take profits at the peak, resulting in a market correction.
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2. Macroeconomic impact: The Federal Reserve may pause interest rate cuts
• U.S. wholesale price data exceeded expectations, raising concerns that the Federal Reserve may delay its interest rate cut plans, reducing demand for risk assets. Bitcoin fell to around $115,000, reflecting market worries about the interest rate outlook.
• The decline in investor expectations for interest rate cuts (the probability of rate cuts has retreated from recent highs) further suppressed market sentiment.
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3. Weak technical signals in the market
• The Bitcoin technical chart shows a 'five-wave upward' pattern (Elliott Wave Theory), suggesting a potential entry into a significant adjustment phase.
• A 'shooting star' candlestick pattern has appeared on the weekly chart, and if the market cap closes below $3.66 trillion this week, it may confirm a 'evening star' reversal pattern.
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4. Liquidation of leveraged positions and capital outflows exacerbate volatility
Over $100 million in Bitcoin leveraged positions in the market were forcibly liquidated due to the correction, intensifying selling pressure. Meanwhile, there has been outflow from cryptocurrency ETFs, further exacerbating the price decline.
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5. Concerns about an overall collapse of the cryptocurrency market are rising
Wall Street has issued a warning regarding the cryptocurrency market with a total market cap of $6.6 trillion, indicating that there may be significant risks in the current market, which has heightened investor anxiety.
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• Federal Reserve policy trends: Particularly the comments from Federal Reserve Chairman Powell during the Jackson Hole meeting and the release of the Federal Reserve meeting minutes, which will significantly influence market expectations for monetary policy.
