The crypto market witnessed a significant downturn as Bitcoin dropped by nearly 5%, reaching $65,000 for the first time in a week. This decline coincided with a 7% drop in the overall crypto market capitalization.
Ethereum also experienced a sharp decline, with its price dropping by 8.5% in the span of 24 hours. According to data from Coinglass, over 277,000 traders faced liquidations, resulting in assets worth $877.79 million being liquidated within the same timeframe.
The decline in Bitcoin’s price is attributed to several factors, including a pre-halving pullback and miner capitulation. Traders often anticipate a bull cycle for Bitcoin following a halving event, leading to profit-taking and a temporary price decrease. Similar pullbacks have been observed in the lead-up to previous halving events, including the one in 2020.
In addition to profit-taking, miner capitulation has also played a role in the recent decline. As the difficulty and operational costs of mining Bitcoin increase, many miners have ceased their operations, leading to a decline in the total hashing power of the network. This, in turn, triggers adjustments in the network’s difficulty to maintain consistent block times, potentially making mining more accessible and profitable for remaining miners.
However, investor skepticism has also contributed to the recent liquidations. Marathon Digital, a prominent player in the crypto mining sector, expressed doubts about the potential impact of this year’s halving on Bitcoin’s price. They suggested that the token may have already reached its peak due to significant inflows from Bitcoin ETFs earlier in the year, casting uncertainty on the expected bullish trend typically associated with halving events.
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