Bitcoin drops to $26,500, see possible reasons

Application with price chart near bitcoin
Application with price chart near bitcoin.

Bitcoin is trading at US$26,500 this Wednesday afternoon (10) and is down 3%, continuing the decline that started last Sunday with the outbreak of war between Israel and the Hamas group.

However, it is possible that other factors contribute to the magnitude of this loss. The biggest examples are US inflation data, regulatory pressure on Coinbase and the massive selling of bitcoin by miners.

While the holiday season has been great for Bitcoin in recent years, the market’s largest cryptocurrency remains under pressure, while spot ETFs remain unapproved in the US. Therefore, it is possible that another major increase will not occur until 2024.

US inflation figures are cooling the markets

After surpassing $28,500 last week and reaching its highest price since August, Bitcoin has already lost $2,000; most losses occurred this Wednesday (10).

Although the US government has not yet published official data on its website, the Associated Press points out that US wholesale inflation rose from 2 to 2.2% per year in September.

Therefore, this may have been a reason for Bitcoin’s decline as inflation data is used by the Federal Reserve to determine market interest rates. Forecasts from the CME FedWatch tool indicate that there is an 8.6% chance of another 0.25% rate hike.

Miners are selling R$2.7 billion worth of Bitcoin

Another piece of information that may have dented market confidence was the massive selling by major Bitcoin miners. According to information from IntoTheBlock, this week’s sales were the highest since April last year.

“Bitcoin miners sold more than 20,000 BTC (R$2.7 billion) this week, the most since April”according to IntoTheBlock. “This suggests that miners are taking advantage of higher Bitcoin prices to offset their operating costs.”

“While this is not unusual, it could cause significant selling pressure in the market.”

With the advent of the halving, which is expected to take place at the end of April 2024, it is possible that the mining sector will be busier than normal. In addition to changes in the cash registers of these companies, announcements about updating machines to new models are also expected.

Coinbase is facing regulatory pressure

In June, the SEC sued Coinbase, saying several cryptocurrencies listed on the exchange were securities. A document issued on Tuesday (10) shows that the SEC found support from other regulators in the matter.

“The SEC’s theory in this case is consistent with the agency’s long-standing public position” It is “well within the limits of established law”This is according to the North American Securities Administrators Association (NASAA).

Shares of Coinbase, traded on Nasdaq, fell 5% this Wednesday (11) thanks to NASAA’s support for the SEC during the trial. Therefore, this could have been another reason that put pressure on Bitcoin’s price.

Finally, while Bitcoin has a great track record in the final quarters of every year, it is possible that 2023 will be an exception to the rule. In any case, investors continue to look forward to the 2024 halving and the possible adoption of BTC spot ETFs in the US.

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Source: Live Coins

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