Bitcoin
Exact Reason Behind Bitcoin (BTC) Crash Finally Revealed
Arman Shirinyan
Bitcoin’s fall was abrupt, but the reason was finally revealed
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Bitcoins the drop below $65,000 was clearly unexpected, and the reasons behind it were quite unclear and determining what exactly caused it is tricky. However, we may have a to respond.
Recently, cryptocurrency hedge funds have given up on Bitcoin completely. Over the previous 20 trading sessions, they have decreased their exposure to the BTC market to just 0.37. This is the lowest level since October 2020. The charts show the Bitcoin price trend from 2019 to 2024, highlighting notable highs and lows.
Hedge funds’ reduced exposure to Bitcoin offers an important reason for the cryptocurrency’s recent sharp decline. The bottom chart illustrates the one-month rolling beta of global crypto hedge funds relative to Bitcoin, demonstrating the degree to which hedge fund performance is influenced by changes in the price of Bitcoin.
A hedge fund’s performance follows Bitcoin if its beta value is one, while a beta of less than one denotes reduced exposure. The drop to a beta of 0.37 indicates that hedge funds are much less vulnerable to changes in the price of Bitcoin than they were a few years ago.
Hedge fund exposure last reached this low point in October 2020, just before Bitcoin underwent a notable bull run. Hedge funds are well known for their calculated actions and often have access to cutting-edge data and industry knowledge. They may have expected more declines or volatility based on their withdrawal from the Bitcoin.
There are a number of reasons for this cautious approach, such as changes in domestic investment strategies, macroeconomic conditions or regulatory uncertainties. As there was less exposure, there was likely more selling pressure on Bitcoin, which pushed the price below the crucial $65,000 mark.
Because they often have significant capital under their control, hedge funds have significant influence on the market. Market climate and price action greatly affect the flow of funds.
About the author
Arman Shirinyan
Arman Shirinyan is a trader, crypto enthusiast and SMM expert with over four years of experience.
Arman firmly believes that cryptocurrencies and blockchain will be in constant use in the future. Currently, it focuses on news, articles with in-depth analysis of cryptocurrency projects, and technical analysis of cryptocurrency trading pairs.