Bitcoin briefly dropped below $60,000 for the first time in more than a month. It was noteworthy that the decline occurred before the halving, which is expected to occur in a short time.
Bitcoin price fell as much as 5% to $59,888 before recouping some of its losses.
This event, known as the “halving,” occurs every four years and has traditionally been seen as a positive catalyst for Bitcoin prices. This event reduces the supply of new tokens from the blockchain, theoretically increasing the value of existing tokens. However, concerns that the effects of the halving may have already been reflected in the current price, combined with a risk-off investment environment, led to a prolonged market decline.
INDIGO Fund Co-Founder Nathanaël Cohen explained the situation as follows:
“People want to avoid risk because it is not yet clear whether the halving will be a market-moving event or an ETF-eclipsing event. There is an additional macro factor that is putting more pressure on risk assets: tensions in the Middle East.”
The decline in Bitcoin last week was further accelerated by the liquidation wave in long positions for cryptocurrencies. Approximately $780 million worth of long crypto positions were liquidated in 24 hours last Friday. BTC fell further as some investors became risk averse due to Iran's attacks on Israel.
Despite recent market turmoil, Bitcoin's long-term outlook remains largely bullish, according to some market participants. Ravi Doshi, market manager at brokerage firm FalconX, said: “FalconX continues to see longer dated purchases on our derivatives desk as our clients expect higher prices in the second half of the year.”
*This is not investment advice.
