New Delhi: Bitcoin prices have declined recently which has led to concerns amongst investors. On Thursday, the cryptocurrency dropped to Rs 63,99,641.12 per coin, a decline of 3.10 per cent. The cryptocurrency has witnesses a steep fall in recent days. Many experts are of the view that Bitcoin could register a drop of around 70 per cent.
Commenting on Bitcoin decline, CryptoQuant CEO Ki Young Ju said the fall is related to technical charts but the result of a liquidity shortage. Young Ju is of the opinion that the ‘new’ money that had pushed Bitcoin to record levels is no longer entering the market.
Why Bitcoin is declining? Understanding the liquidity Shortage
According to CryptoQuant CEO, Bitcoin rallied as there was a steady continuous inflow of new capital from ETFs and large institutional investors, which helped the new money balancing the profit-taking by older investors. However, the scenario has changed. There is no or minimal infusion of fresh capital in Bitcoin, while the existing, especially the ones who are old investors, are still booking profits. When there are fewer buyers and more sellers, pressure on the price is inevitable, he added.
Could Bitcoin crash 70%?
Expressing his views on concerns whether Bitcoin could drop by as much as 70% as witnessed earlier, Ki Young Ju said that such a crash would not happen on its own and it would be a reality only if MicroStrategy (MSTR) and Michael Saylor start selling Bitcoin. So far, MSTR has been the largest institutional buyer of Bitcoin. However, if it sells its holdings, a 70% decline could happen.
The CryptoQuant CEO it is not yet certain that Bitcoin’s decline has stopped, indicating that the price could go down further. Selling pressure still remains in the market, so fluctuations may continue. However, he believes the chances of a very sharp and very large drop are low. He is also of the opinion that Bitcoin’s price could rise and decline for some time.
Bitcoin is not falling because ‘crypto is over’, but because fresh money is not getting pumped in, stablecoin liquidity is shrinking, and major buyers are currently on the sidelines. Bitcoin may see continued fluctuations in the coming period. Until fresh money enters the market for the purchase of the cryptocurrency, it will be difficult for any strong trend to form.
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