Bitcoin’s value has dropped below $60.5k, the lowest in nine days. The 7% drop in the last 24 hours has sparked increased interest from traders looking to buy the dip. Typically, a bit of crowd fear is required for prices to recover fully.
Excessive Optimism Among Investors
The current bitcoin Fear and Greed Index, which monitors crypto market sentiment, is leaning toward greed rather than fear. Meanwhile, analysts and market observers are sharing their thoughts on what triggered the cryptocurrency fall on social media.
However, it is not only Bitcoin that has been plummeting. On the last day, the prices of several other popular crypto coins, such as Ethereum (ether), Solana (SOL), and Cardano (ADA), and meme coins dogecoin and Shiba Inu, have also declined. According to tracker CoinGecko, the global crypto market cap has plunged 10% in the last 24 hours to $2.7 trillion.
Glen Goodman, a market analyst, and crypto blogger feels bitcoin’s recent drop results from over-exuberance. “Corrections persist as long as it takes for most traders to lose hope and quit buying dips,” he tweeted.
There is also the chance that long-term investors are taking advantage of the recent all-time high to benefit from their holdings. A dropping price also attracts panic sellers, who are often novice to bitcoin investment and more susceptible to getting frightened by unexpected market moves.
Why are Cryptos Dipping?
At this point, there does not appear to be a single cause for this mini-price drop, with numerous factors likely at work. The SEC rejected the spot bitcoin ETF at the end of last week, but it had a minimal market impact at the time, and there are numerous others in the works.
Some experts also blamed the drop on new tax reporting rules for digital currencies, part of the $550 billion infrastructure plan signed into law by President Joe Biden on Monday. In addition, during a press conference on Tuesday, China’s state planner, the National Development and Reform Commission (NDRC), stated that the government would continue to clean up virtual currency mining.
China cracked down on bitcoin mining earlier this year, causing a mass exodus of miners. Mining is the time-consuming and energy-intensive process of creating new currencies and keeping track of all transactions involving current digital tokens.
More Losses in BTC?
If bitcoin fails to recover above the $63,000 resistance level, it may continue to fall. On the downside, there is immediate support at the $61,200 level.
The first significant support is building at the $60,000 level. The following critical support level is at $59,000, below which the bulls may struggle to keep prices in the green in the short term.
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