$74,000… This is the new All Time High (ATH) signed by bitcoin (BTC) after a previous price record of $69,000. Certainly, the flagship crypto has exploded the counters. But while we expected its momentum to continue in the wake of the projections, it collapsed. Here is what can explain this sudden drop.
Whales take advantage of bitcoin’s record surge
A few weeks ago, MicroStrategy, one of the biggest whales in bitcoin, hit the headlines. Michael Saylor’s company then announced that it did not plan to recover its winnings.
While this choice may be laudable, it is not the option of other whales. One of them is in the news for its choice to capitalize on the recent surge in crypto which has brought its valuation to around $74,000.
So, this whale, which has held bitcoins since August 2023, embarked on an aggressive sales policy. It initially sold 4,300 BTC at an average price of $43,000, making a profit of around $183 million. This, after having previously reaped a profit of $217 million following bitcoin sales on Binance.
In addition, we observed transfers involving several other whales to various exchanges, for a total of 7,000 bitcoins, or more than 500 million dollars. One transaction notably allowed 3,001 BTC, or $217 million, to be deposited on Coinbase.
Several analysts find in this dynamic the causes which explain the sudden fall of bitcoin now to the level of 70,000 dollars. This, after a substantial drop in its valuation of 4.37% in 24 hours. But this reason is probably not the only one.
Bitcoin price affected by inflation forecasts
If the price of bitcoin, like the main stocks elsewhere, has collapsed, it is not only because of the choices of certain whales. This downward trend seems linked to the publication of higher than expected inflation data in the USA.
Indeed, the surge was stopped by the announcement of a 0.6% increase in the producer price index for the month of February, higher than the 0.3% forecast. An unexpected rise in inflation which is a sign of continued economic uncertainty.
As a result, in addition to bitcoin, the S&P 500, the Nasdaq and the Dow Jones all fell. This dynamic reflects the volatility of assets deemed to be at risk, in response to inflationary pressures.
Speculation is rife about possible interest rate reductions from the Federal Reserve (Fed). The hope is that a reduction will be made in May to combat inflation. For analysts, the materialization of these rates is crucial to support an upward dynamic for bitcoin.
From a technical point of view, the outlook for bitcoin depends on its ability to hold above key support levels. Thus, a sustained move above $70,000 could reignite the bullish momentum, potentially paving the way for reaching a new all-time high.
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