Reasons Why Bitcoin Tumbled 11%

  1. Negative Market Sentiment

The decline in the Bitcoin (BTC) price is simply a continuation of negative market sentiment, the same trend we have seen over the past few weeks. “These sentiments are fueled by a flood of depressing news that outweighs objective asset data,” said Jason Dean, an analyst at Quantum Economics. Dean’s long-term outlook is positive, but he believes that current price behavior is likely to continue in the  immediate/short-term and may put further downward pressure. “Once fear sets in, it takes a while to break and you simply have to wait for capitulation before you can move back to “normalized” ranges.”

2. Leveraged Long Positions

According to Ben McMillan, founder of IDX Digital Assets, another reason is the leveraged long position that has worsened sales to the Asian Open on Friday. “This is nearly always the case with bitcoin,” said McMillan, who said that “$40,000 was an important support which has now turned into a resistance level and we could certainly see more downside over the weekend.”

3. BTC is moving in conjunction with traditional markets

According to Lucas Outumuro, research director at IntoTheBlock, Bitcoin and the entire cryptocurrency market act as highly sentimental beta assets. “Macro concerns and low returns for tech companies also exacerbated this correlation,” Outumuro said.

According to CoinDesk, bitcoins are trading at $38,446 at the time of reporting.