Why does bitcoin crash? How low can the price be?
Bitcoin (BTC), the world's largest by market capitalization, is receiving a lot of attention from the crypto community following a series of price drops. However, there are several speculations regarding this price cut. Some say this is related to the defunct crypto exchange Mt. Gox, while others say it's Fed Chairman Jerome Powell's anti-crypto stance.
The reason behind the fall in the price of Bitcoin
In the year On December 19, 2024, Mit Gox reportedly distributed $100 million worth of Bitcoin. The report states that the firm transferred this large amount of BTC to three different wallet addresses, each of which received $30.18 million worth of bitcoins.
Mt. Gox payment
At Mt. Gox was created due to the sales pressure to distribute billions of dollars of BTC to creditors, an event that will take place in the coming days. However, the exact schedule is not known. If this distribution occurs, the recent drop in prices may pale in comparison, and we may witness a significant drop in the price of Bitcoin.
Jerome Powell's position increases the pressure
Another possible reason for the recent price decline is Fed Chairman Jerome Powell's anti-crypto stance at the time of the rate cut announcement. In an interview, Powell made a bold statement that garnered a lot of attention from the crypto community.
“We are not allowed to own Bitcoin and we have no intention of changing the law,” he said. Following this announcement, the entire crypto market is showing a price drop.
Bitcoin (BTC) technical analysis and upcoming level
Apart from these two assumptions, another factor behind this significant price decline is the breakdown of a critical support level. According to CoinPedia's technical analysis, BTC has fallen below the support level it has held since early November 2024.
Following this breakdown, BTC experienced a 6.5% drop in price but found horizontal support at $92,500 and is now starting to move higher. Based on the recent price action, if BTC fails to hold this level, there is a strong possibility that it could go down to $85,500. However, if the support continues, the upward momentum may continue.
In the last three days, BTC has fallen by more than 14%, its price has dropped from $106,600 to $92,600. This significant decline has caused BTC to breach its critical support level that has been intact since early November 2024.
