The world’s largest cryptocurrency – Bitcoin, is facing its biggest monthly decline in three years. So far this month, this digital token has fallen by more than 21 percent. Earlier in June 2022, a decline of more than 20 percent was seen in Bitcoin. This means that investors have seen a fall of more than $22,700 i.e. more than Rs 20 lakh on one bitcoin.
This decline is mainly due to the trend of continuously increasing liquidity and risk aversion in speculative assets. Many major altcoins have also fallen, deepening the overall recession in the crypto market. On Tuesday, November 25, the leading cryptocurrency traded around $86,800 after recovering from a sharp fall to a seven-month low.
Pi42 co-founder and CEO Avinash Shekhar said that the crypto market is balancing between a deep crisis and signs of selective recovery. The recent crypto market downturn has reduced excess leverage and reduced liquidity, while changes in Federal Reserve interest rates and new ETF issuances continue to fuel flotation. Let us also tell you what are the reasons behind this decline.
profit booking
Bitcoin has suffered a sharp decline since the beginning of October, falling from a lifetime high of nearly $126,000 to just below $82,200, according to data from CoinGecko. According to analysts, long-term investors continue to book profits and have sold nearly 800,000 bitcoins this month – the largest wave of such selling since January 2024.
Fed cuts interest rates
When interest rates are low, Bitcoin rises. But with the Federal Reserve sending mixed signals about a third interest rate cut in December, this uncertainty could weigh on Bitcoin’s price. Shekhar further said that on-chain and technical signals indicate a possible bounce as buyers return, although signs of structural deterioration still remain relevant. Growing optimism over a possible interest rate cut in December has eased some macro pressure and encouraged strategic buying.
risk free sentiment
Bitcoin has declined in recent weeks, mirroring the decline in tech stocks and other risk-sensitive assets. Macroeconomic concerns, Trump’s unexpected trade war and concerns over inflated valuations of AI companies are weighing on sentiment.
How can the crypto market be?
Zebpay COO Raj Karkara said in a Mint report that investors are taking profits, sentiment is in sync with global cues, and short-term caution is visible, but none of this points to a structural downturn in Bitcoin’s long-term trend. Although a brief dip cannot be ruled out, even below the recent $82,000 range, on-chain indicators, institutional interest and long-term holder confidence remain strong.