Bitcoin Price Plunge Causes A Massive Drop Below $40,000

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Yesterday, the price of Bitcoin (BITCOMP) dropped below $40,000 despite the positive news that has been flocking into the cryptocurrency space. Jack Dorsey even made an announcement teasing that he would make a Bitcoin payment plan. Despite the opportunity to buy the dip, bulls are hesitant to do so. On the other hand, long-term holders continue to accumulate.

Why the Price Dropped

The price of Bitcoin has not recovered despite continuing claims that banking giants are beginning to offer Bitcoin investment and commercial services and that El Salvador officials are hinting at intentions to tender the U.S. dollar to Bitcoin.

On June 18, the U.S. Federal Reserve’s statements on the potential for interest rates rising sooner than expected led to a rise in the U.S. dollar price at the expense of risk, Treasury Bonds, and cryptocurrency markets.

Yesterday’s sales dragged Bitcoin prices down from the important support of $36,000, causing traders to anticipate $32,500 as the following stop before looking to the $30,000 low swing as a rebound. These technical factors, combined with negative news headlines such as the ending of crypto miners by China’s authorities or the recent Iron finance protocol “rug pull,”  have made traders worry about the current fall in Bitcoin price.

Elon Musk also sent shock waves across the Bitcoin market. He revealed that Tesla (TSLA) would stop using Bitcoin for payments until the Bitcoin network has boosted its renewable energy use. As a result, the Fear and Greed Index has decreased to 25, and it has recorded acute fear for the last month’s pattern.

Exchange Inflows Rose Before Sell-off

Data from CryptoQuant illustrated that BTC exchange net flows offered some form of a warning in advance of this week’s $41,000 to around $35,000 dip. An influx in BTC trading began on June 15, when BTC prices reached $41,300, followed by a 15% decrease over the next three days. Historical Bitcoin price data from February through April 2018 demonstrates that an increase in short-selling is often followed by a rise in Bitcoin price.

One expert observed that whale activity, particularly on the Gemini Cryptocurrency Exchange, significantly links some of the major crypto market sales observed in 2021. Although investor worries are increasing, certain traders who purchased during March and May highs are selling at a loss. Meanwhile, the total Bitcoin supply held by long-term holders continues to grow following their downturn in mid-May.