Bitcoin Price Drops to $83,600 – Is This the End of the Bullish Cycle?

Bitcoin Price Drops to $83,600: Is the Bull Run Over?

Bitcoin Price Drops to $83,600 – Bitcoin’s price fell 4.1% below the $85,000 level on Wednesday night ET, continuing a downward trajectory that has persisted since last week. The world’s largest cryptocurrency briefly dipped to as low as $83,600, marking its lowest price since November 2024, before recovering slightly to its current price of $84,738, according to The Block’s bitcoin price page. Analysts at Presto Research noted that this marked the largest four-day drop for Bitcoin since August of last year.

Ether and Altcoins Also Suffer Losses

Other major cryptocurrencies followed suit, with Ether dropping 5.2% over the past 24 hours to trade at $2,360. XRP, BNB, and Solana also saw declines in their respective prices, reflecting the broader bearish trend in the market. The overall downturn has left many traders and investors questioning the future trajectory of digital assets, as the market’s volatility remains high.

Bitcoin’s Decline Attributed to Basis Trade Unwinds

Peter Chung, head of research at Presto Research, pointed out that Bitcoin’s recent plunge is closely linked to the unwinding of basis trades, particularly within U.S. spot bitcoin exchange-traded funds (ETFs). On the previous day, a record $1 billion worth of outflows from these ETFs underscored the broader sentiment that institutional investors are closing out their positions as Bitcoin’s price continues to slide.

Chung emphasized that while it’s challenging to predict how long this downturn will last, key indicators to watch include the CME’s annualized basis and traditional financial (TradFi) funding rates, such as three-month Treasury bill rates. Currently, the annualized basis on both CME and Binance shows no signs of a recovery. However, some analysts are looking to the funding rates for potential signs of relief, as they are starting to decline in response to weaker macroeconomic data.

Challenges Ahead for Bitcoin and Crypto Market Sentiment

The recent decline in implied Bitcoin volatility and falling prices suggest that speculators are beginning to abandon hopes for higher prices in the near term. Chris Yu, co-founder and CEO of SignalPlus, a crypto trading software company, noted that U.S. crypto-friendly policies may take time before they result in tangible regulatory frameworks. Furthermore, scrutiny on firms like MicroStrategy (MSTR), which recently increased its Bitcoin holdings, is likely to continue as the market struggles. This uncertain environment points to a challenging period ahead for Bitcoin and the broader crypto market.

Despite the current challenges, some market watchers remain hopeful that Bitcoin could eventually resume its upward trajectory over the long term, once the market stabilizes. However, for now, the outlook appears uncertain as institutional moves and macroeconomic trends continue to influence the market.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.