Why is the Bitcoin (BTC) Price Crashing ?
Following the announcement of new customs duties by U.S. President Donald Trump, the entire cryptocurrency market experienced a massive sell-off. In this context, Bitcoin (BTC), the largest cryptocurrency in terms of market capitalization, plunged by over 6%, entered a downtrend, and is now heading towards a rebound.
The potential reason for this massive sell-off in the market is the announcement of these new customs duties, which will now impose tariffs of 10% on key countries, while China, the EU, and Japan will face tariffs of 34%, 20%, and 24% respectively.
Following this announcement, BTC lost its recent support that it had formed during market uncertainty. However, this is undoubtedly also due to the massive drop in the SP500 that was rejected from its 200-day moving average and is heading towards a significant drop.
According to analysts, the SP500 could see its worst drop in over 20 years. Consequently, BTC is suffering even more during stock market openings. Nevertheless, there is a sign of hope for a Bitcoin rebound today.
Indeed, the SP500 experienced one of its biggest CME gaps in history, recording a gap of about 5%. Historically, in approximately 60-70% of cases, after such a significant gap, the market shows a rise the next day, often due to buying or stabilization after the initial panic. For example:
- After the gap on October 19, 1987, +5.33%.
- After the gap on October 15, 2008, +4.25%.
- After the gap on March 16, 2020, +6.00%.
Consequently, BTC could benefit today from this opportune rebound of the SP500 before it continues its slump.
Bitcoin Technical Analysis and Future Levels
According to experts’ technical analysis, BTC recently lost the support of $82,500 and fell below the 200-day Exponential Moving Average (EMA), indicating that the asset is entering a strong downtrend.
However, BTC has already rebounded well, with a +2.84% increase since yesterday’s drop.
If BTC closes its daily candle below the $81,500 level, it is highly likely to experience a significant drop and reach the $77,700 level or even lower in the coming days.
BTC could target its 50-day moving average at $87,500 during the day in case of market gains. The next target is at $89,600, a zone where over 400 million dollars of shorts are set to be liquidated.
Massive Sale of 18,930 BTC by Short-Term Holders
Following this massive price drop and the shift in market sentiment towards bearish, short-term holders have been shaken. Recently, a prominent crypto expert shared a message on X (formerly Twitter) indicating that short-term holders had sold 18,930 BTC last night, right after the announcement of the new taxes.
“18,930 #Bitcoin $BTC were sold by short-term holders last night, right after @realDonaldTrump announced new taxes!”
This massive sale by short-term holders indicates BTC is capitulating. It could mark a rebound if the smart money used this massive sale as an opportunity to buy lower.
Technical analyses indicate that BTC has lost momentum and could continue to decline in the coming weeks. However, today could be a final glimmer of hope rebound. Nevertheless, caution is advised, as volatility could remain high.
