Since Wednesday, the crypto market has been bearish, including bitcoin (BTC), the world’s leading digital asset, and many altcoins. Many investors have displayed a lack of confidence in the market, cashing out their holdings as the market turned red.
Consequently, as revealed by online liquidation tracker Coinglass, bullish leverage traders have lost about $570 million. In comparison, spot Bitcoin exchange-traded funds (ETF) narrowly escaped a bearish day with just $52 million in inflows the day before. So, the industry is filled with questions as investors and traders seek to know why the market is down.
Here Are Three Reasons
- Oil Price Increment
Russia and the Organization of Petroleum Exporting Countries (OPEC) have decided to tighten the oil supply, leading to a surge in the natural resource price. This contributes to inflation as producing and transporting goods becomes more challenging.
Increasing inflation has negatively affected the crypto market, reducing investors’ interest and appetite for riskier and highly volatile assets like BTC and other cryptocurrencies. So, many investors are converting their crypto to fiat and less volatile assets as a wedge against inflation.
- New Pandemic Fears
Starting this year, the media is filled with news about a new pandemic that may strike the globe soon. Just as when the coronavirus pandemic (COVID-19) hit the world, the effects were drastic. Many countries lockdown activities, leaving citizens to rely on savings and investments. This led to a crypto market drop during the early stages of the pandemic.
Similarly, investors globally are preparing for the effects of the anticipated pandemic by cashing out their crypto holdings as security.
- Better Jobs Data
Recent U.S. job openings data revealed a massive $8.096 million in openings, surpassing the previous record of $7.605 million. This indicates a resilient labor market, which will affect monetary policies and financial markets.
The strong job openings data suggests that the U.S. economy is growing, leading to a decline in interest in volatile assets like bitcoin.
However, experts believe the current market pullback is only momentary, and the market is expected to recover quickly.
New All-time High in Q1 2024
Analysts say a significant market rebound is approaching as many investors have become more interested in the crypto market. For instance, American entrepreneur Elon Musk echoed his support for BTC a few months into Republican Donald Trump’s campaign. Many publicly traded firms, like Kurl and Riot, have adopted Bitcoin as a primary reserve asset.
Meanwhile, the crypto community looks forward to Trump’s enthronement as the new U.S. president. He has promised to ease the strict regulations on crypto in America.
