There could be certain theories behind the sudden and freakish price dip of Bitcoin- which range from SpaceX reportedly selling all of its holdings of Bitcoin, the bankruptcy of a major property giant in China, to the increasing fears of interest rate hikes.
On 18th August, the price of the cryptocurrency did plummet by over 8% in just a span of 10 minutes, where it also took with it the wider market of cryptocurrency and ended up leaving many in the crypto community scratching their heads. While there seems to be no consensus as to why the markets ended up dropping suddenly, several analysts in the crypto market have already shared their primary theories with Cointelegraph.
What Are The Possible Reasons Behind The Bitcoin Price Drop
Josh Gilbert, the market analyst for EToro, recently pinned this drop in the price of Bitcoin on a report that Elon Musk’s brainchild, SpaceX, might have offloaded some or all of its Bitcoin holdings, worth $373 million. This came from an article from the Wall Street Journal on the 17th of August. This definitely puts the sudden drop in the price at around 2.5 hours after the report ended up being published online. Gilbert further stated that there could be another theory behind this rapid shift in the sentiment- which was due to the expectations of the broader market of future interest rate hikes from the US Federal Reserve.
Tina Teng, one of the market analysts from CMC Markets, went on to share a completely different opinion, where she looked at the recent rise in the yields of government bonds as the major cause behind this sell-off. Teng went on to explain that the increasing bond yields routinely showed a reduction in liquidity for the broader market.