Why did bitcoin drop more than 50% in four months? Understand
After a record in October of last year, when it reached its all-time high, the following months brought an increasingly deep decline.
Around 9:20 PM last Thursday, the “digital gold” was quoted at $60,074, a drop of 17.43% in just one day. Analyzing the last four months — since October 6 of last year, when bitcoin reached its last historical record and hit $126,198.07 — this represents a decline of over 50%.
According to the CoinMarketCap platform, this last drop is mainly explained by the reduction of leveraged long positions, with $1.23 billion in bitcoin liquidations (80% long positions), which forced rapid sales. The so-called liquidations occur when the price falls so much that, for those who invested with borrowed money on an exchange, the collateral is no longer sufficient to cover the losses, triggering automatic sales to settle the debt.
These massive sales originate from a widespread sentiment of risk aversion, related to economic and political events. One of the most recent facts was a regulatory statement from the U.S. Department of the Treasury. In particular, institutional confidence was weakened after comments from U.S. Treasury Secretary Scott Bessent circulated, dismissing government or banking bailouts for cryptocurrencies.
This refusal to offer a safety net influenced more cautious investors and triggered a wave of institutional sales, amplifying the already existing bearish sentiment.
For you, what is the influence of this drop? Comment on this post!
Source: La Nacion
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