Why is Bitcoin Crashing So Hard Right Now?

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Bitcoin is having a rough August. The cryptocurrency has crashed in value against the US dollar, dropping to a six-month low of $49,580.

What caused this sudden fall?

Key Reasons for the August Crash

Bank of Japan’s Rate Hike: On July 31, 2024, the Bank of Japan raised its interest rates from 0% to 0.25%. This led to a sharp rise in the yen's value. Many investors had borrowed yen to invest in higher-yielding assets, like Bitcoin. When the yen appreciated, these investors faced significant losses and had to sell their Bitcoin, causing its price to drop, according to FXEmpire.

Massive Liquidations: The price drop led to a wave of liquidations. Over $1 billion in leveraged crypto positions were liquidated within 24 hours. This added more pressure, pushing Bitcoin prices down further, according to FXEmpire and Kitco News.

Weak US Economic Data: Poor economic data from the US, such as a disappointing jobs report, added to the negative sentiment. Fears of a potential recession grew, reducing demand for riskier assets like Bitcoin, according to FXEmpire.

What’s Next for Bitcoin?

Bitcoin's current situation is similar to what happened in March 2020.

Back then, during the Covid-19 market rout, Bitcoin prices fell sharply but rebounded strongly when the US Federal Reserve intervened. Some traders believe that Bitcoin might see a similar rebound now, according to FXEmpire.

Current Bitcoin Price

As of now, Bitcoin's price has shown some recovery. It’s trading around $71,000, reflecting some stability after the initial crash. Market analysts are closely watching to see if Bitcoin will follow the pattern of its past recoveries.

For real-time Bitcoin prices, check out MoonPay Bitcoin Price tracker.