Bitcoin Collapses Below $2 Trillion
The price of Bitcoin has dropped to its lowest level since May, reaching $98,081 and falling below a $2 trillion market cap. Bitcoin recorded 16 consecutive 15-minute red candles, reflecting a bearish market sentiment. Over $400 million worth of crypto positions were liquidated, predominantly affecting longs. Panic selling by retail traders has driven market sentiment, while analytics suggest overreactions on social media can cause price movements contrary to general sentiment. Profit-taking by seasoned investors is a potential contributor to the sell-off. Meanwhile, Bitcoin's decreasing correlation with gold might enhance its appeal in institutional portfolios as a diversification asset, according to Fidelity Investments.
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Bitcoin Price Hits Lowest Level Since May
The price of Bitcoin, the leading cryptocurrency by market cap, has plunged to the lowest level since early May, reaching an intraday low of $98,081. BTC's market cap has also slipped below $2 trillion, highlighting the bearish state of the market. Notably, it has printed 16 straight 15-minute red candles, underlining the market's downward momentum.
Massive Liquidations in the Crypto Market
Over the past 24 hours, approximately $400 million worth of cryptocurrencies have been liquidated. According to CoinGlass data, long positions accounted for the overwhelming majority of the wipeout. This marks the second time this month that the flagship cryptocurrency has slipped below the $100K mark.
Market Sentiment and Panic Selling
Analytics firm Santiment has noted that the price drop has triggered a wave of Fear, Uncertainty, and Doubt (FUD) along with concerned social media activity from retail traders. Historically, such panic selling creates opportunities for less risky buying. Santiment observed: "Sentiment always plays a significant factor, and more often than not, prices will move opposite to the crowd's majority narrative on social media."
OGs Selling Bitcoin En Masse
As reported by U.Today, significant sell-offs by OG (original gangster) investors were identified as the main driver behind the recent crash. According to Glassnode, the scale of profits taken by seasoned investors reached levels comparable to previous cycle peaks in late August.
Bitcoin's Correlation with Gold Declines
Chris Kuiper, VP of Research at Fidelity Investments, has highlighted a potential "silver lining"—Bitcoin's correlation with gold continues to decline. Kuiper explained: "In order to be part of institutional portfolios, Bitcoin is supposed to be uncorrelated. If Bitcoin merely trades like a leveraged position on something already in the portfolio, institutional investors could just replicate it by using leverage." The diversification benefits of Bitcoin appear to be a critical factor for institutional adoption.