It seems like a tune at this point, but why is Bitcoin (BTC) dropping again? The world’s largest cryptocurrency has been on a downward spiral, and as early as Thursday morning, it had reached a new low of $70,000 and a 20% decline since the start of the year.
According to Reuters, “Bitcoin was on the cusp of breaking below the key $70,000 level on Thursday as a slide in the world’s largest cryptocurrency showed no signs of stopping.” Experts say the Bitcoin price prediction could tumble to $58,000.
Why is Bitcoin Dropping?
Bitcoin’s price has been dropping and today registered a new low of 3.5% and hit $70,052.38, the lowest since Nov 2024.
“The latest rout in cryptocurrencies has come hard and fast, which analysts say was triggered by the nomination of Kevin Warsh as the next Federal Reserve Chair, due to expectations he could shrink the Fed’s balance sheet,” Reuters says.
“The market fears a hawk with him,” said Manuel Villegas Franceschi from the next generation research team at Julius Baer.
“A smaller balance sheet is not going to provide any tailwinds for crypto.”
That said, it’s not only BTC that has been affected, it has caused a ripple effect in the crypto market. Ethereum (ETH) fell 0.7% to $2,111.34. CoinGape reports that others like BNB, Solana (SOL), Cardano (ADA) and Dogecoin (DOGE) have dropped between 6 and 10% in the last 24 hours. Bitcoin is down nearly 20% YTD, while Ether is down close to 30% YTD.
There have already been over $800 million in liquidations, and more to follow with the Bitcoin price dropping today. “Over 165K traders were liquidated in the past 24 hours,” according to CoinGape. With such huge liquidations, it damages the confidence in the market.
Will Bitcoin drop again?
Analysts warn Bitcoin could face further downside, according to CoinGape.
“We believe this broader decline is mainly driven by massive withdrawals from institutional ETFs… This steady selling in our view signals that traditional investors are losing interest, and overall pessimism about crypto is growing,” Deutsche Bank analysts said.
The problem with making a Bitcoin price prediction or any cryptocurrency is that its price can be easily rattled. Regulatory rumours, policy shifts or general fear can result in a pushback.