Bitcoin Price Continues to Fall Below $60K – Here’s Why

Bitcoin (BTC) has struggled to hold above $60,000 for a week, with the latest rejection occurring on August 27. The next two-day correction of 9.9%, Bitcoin fell to $57,918 on August 28, resulted. A forced release of $143 million will travel on derivatives exchanges backed by BTC. Traders are now asking why Bitcoin has failed to break above $60,000.

The release of the Spot Bitcoin ETF is a lagging indicator of Bitcoin demand.

Some analysts say that the most disappointing area of ​​recent weakness is the exit of the Bitcoin Exchange-Traded Fund (ETF). However, such information is often reflective, meaning traders often turn bearish after a news event changes their outlook. More significantly, Bitcoin's most recent correction on August 29 coincided with movements in the S&P 500 index.

The event was preceded by a sharp rise in the 2-year US Treasury yield to 3.85%, the lowest level in more than three weeks. However, on August 29, there was a significant change, taking the yield to 3.90%, indicating that investors are loading these instruments to get higher returns.

According to Zacks Research, this decline in appetite is due to uncertainty over Nvidia's corporate earnings, released after the stock market closed on August 29, and the upcoming July US personal consumption expenditures (PCE) index. It's on August 30th. Investors were concerned that the higher inflation reading could delay interest rate hikes by the central bank.

Despite speculation, Nvidia shares reacted negatively, falling to their lowest level in two weeks in after-hours trading. As for inflation, there were no surprises when PCE rose 2.6 percent year-on-year, boosting investor confidence that the US Federal Reserve (Fed) may soon ease some of its restrictive monetary policies aimed at curbing inflation.

Therefore, the rejection of Bitcoin at the $61,000 level on August 29 may be related to the concern of traditional financial investors, especially due to the high dependence on the growth of technology companies, driven by the demand for artificial intelligence and the possibility of a 100% market cap. Interest rate reduction in September.

Essentially, slightly less favorable economic indicators can cause a sharp move in fixed income markets, which in turn will in turn affect the stock market and affect the price of Bitcoin, creating pessimism. However, this does not fully explain why Bitcoin failed to sustain the $60,000 support on previous occasions in August.

Bitcoin is already a top-10 global tradable asset, but it can be flipped even further.

Instead of fixating on Bitcoin's nominal value, it should consider how the cryptocurrency's $1.2 trillion market capitalization compares to broader financial markets and currencies. This ranking puts Bitcoin among the top 10 global financial instruments, ahead of Warren Buffett's Berkshire Hathaway conglomerate and TSMC, the world's largest chipmaker.

To put this into perspective, Berkshire Hathaway's annual profit is $121 billion, which means the company could buy the entire Bitcoin market capitalization in 10 years of net income. In fact, the company holds $277 billion in cash and equivalents, which would be enough to get 4.61 million BTC for $60,000, or 23% of the coins currently in circulation.

Related: It's Time to Get Rid of the Bitcoin Power Law Theory

Apart from the base currency – physical currency and bank reserves held by the respective central banks – Bitcoin's $1.2 trillion value is equivalent to the United Kingdom's British pound. In this analysis, Bitcoin's remaining competitors are the US dollar, the euro, the Chinese yuan, and the Japanese yen.

None of these fundamental parameters seem to be enough to keep Bitcoin's price below $60,000. However, traders point out that they are questioning the current adoption rate, including the size of the Bitcoin ETF market and the use of the Bitcoin network as a settlement hedge. Investors currently seem to prioritize technological growth and the relative stability of the world's largest economies, but that sentiment could easily change over time.

This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.