Bitcoin prices fell to almost $95,000 today. (Photo illustration by Chesnot/Getty Images)
Bitcoin prices were fluctuating near the $95,000 level on the evening of Thursday, December 26, after losing almost 5% of their value in less than 24 hours.
The world’s most valuable digital currency fell to just $95,083.93 earlier today, according to Coinbase data from TradingView.
The cryptocurrency fell to this level after nearing $99,900 on Christmas Day, additional figures from Coinbase from TradingView reveal.
As a result, the digital asset depreciated by around 4.8% in a matter of hours.
After falling to this level, bitcoin recovered somewhat, but was still trading between $95,000 and $96,000 at the time of writing.
In explaining the cryptocurrency’s recent decline, analysts pointed to several potential causal factors.
Poor trading volume
One development that market observers have repeatedly highlighted is low trading volume, which makes it easier for Bitcoin to experience more exaggerated price movements.
“With Christmas and New Year falling smack dab in the middle of two consecutive weeks this year, markets are expecting a longer than usual holiday low volume period,” Tim Enneking, managing partner of Psalion, said in comments sent by email.
“Low volume often leads to greater volatility, as smaller orders can have an outsized impact,” he said.
Lackluster business activity seems to be a typical occurrence this time of year, according to Alex Lin, co-founder and general partner at venture capital firm Reforge, who described it as a “common occurrence” thanks to comments submitted by email.
TradingView Malfunction
In this environment of reduced trading volume, several market observers have pointed to an apparent malfunction on the TradingView website as contributing to bitcoin’s recent decline.
The situation, which Cointelegraph reported on earlier, caused the website to temporarily declare that Bitcoin’s dominance, i.e. its share of the total cryptocurrency market, had fallen to zero.
Marc P. Bernegger, co-founder of crypto fund of funds AltAlpha Digital, commented on this situation via email.
“Bitcoin’s latest price swings from almost $100,000 to around $95,000 appear to have been influenced by an issue on TradingView,” he said.
“This error falsely displayed Bitcoin dominance at 0%, causing panic among traders and resulting market volatility. This led to significant liquidations, with approximately $33 million in long Bitcoin positions liquidated within hours,” Bernegger added.
Lin also mentioned this particular development.
“There was also an untimely issue on TradingView where the Bitcoin dominance indicator fell to 0%, which may have triggered additional outflows,” he said.
“Thus, the panic due to the technical error in a low liquidity environment, amplified by strategic profit taking after a relatively positive year and major institutional movements of $338 million in BTC ETF outflows on Christmas Eve , are the most likely catalysts for market withdrawal. last 24 hours,” added the analyst.
Disconnect from the market
George Kailas, CEO of Prospero.ai, offered a different perspective on the causes of Bitcoin’s recent price decline, choosing to focus on a short list of factors.
“I think what we’re seeing here are two things,” he said by email, the first being “a natural correction on an asset that has moved as quickly upward as one can s ‘wait for anything to move’.
“To that end, one of the reasons I think these fluctuations are so wild is the disparate nature of policy expectations without policy,” he said, helping to flesh out his views on the subject.
“There has been a huge rush to expect a US president more friendly to Crypto than anything we have seen so far,” Kailas said.
“But these are just expectations, even if we expect policies to be quite crypto-friendly, the policies don’t exist yet,” he noted.
“There must therefore first of all be a certain probability that certain promises will not materialize,” underlined the analyst.
“Moreover, it will be difficult for the market to determine what is a fair price for the impact of these policies, even once they are adopted. »
“But at least when it comes to policies versus political expectations, the market can understand them in reality versus levels of speculation,” he stressed.
Disclosure: I own Bitcoin, Bitcoin Cash, Litecoin, Ether, EOS and SOL.
