A few minutes before the U.S. financial markets opened, the Bitcoin price jumped above $70,000. However, this rise was short-lived as the price quickly dropped by more than $3,000 to $66,700.
Despite the optimism among investors, fueled by statements from Donald Trump to include Bitcoin in his financial policies once elected the new president of the United States this November, the resistance at $70,000 proved too strong.
Why is the Bitcoin Price Falling?
There are various factors explaining the recent drop in the BTC price. The U.S. government moved $2 billion worth of seized Bitcoin on Monday, causing prices to drop and worrying investors. According to Arkham Intelligence, a blockchain intelligence firm, the government transferred 29,800 BTC related to the Silk Road case to an unknown address, and then sent 19,800 BTC and 10,000 BTC to two different addresses. Analysts believe the 10,000 BTC transfer, worth $670 million, was likely a deposit to an institutional service. Such large transfers usually lead to fear of selling pressure, leading to price drops.
Another factor is the strong resistance around the psychological level of $70,000. Such levels often act as barriers, where many traders take profits or become hesitant to enter new positions, leading to price declines. This has also been the case now, as prices were already retreating prior to the move of seized Bitcoin.
Additionally, the decreasing risk appetite of investors right before a Fed meeting can play a role. In the run-up to such meetings, markets often become uncertain, especially if there are speculations about policy changes.
Although signals for a rate cut in September are expected for the upcoming meeting, investors remain uneasy. This uncertainty can contribute to a wait-and-see attitude and increased volatility in the market, which can further pressure the BTC price.
At time of writing, Bitcoin is moving hands at $66,706 per coin, according to CoinMarketCap data.
July 29, 20:42: Updated to include $2 billion move worth of Bitcoin
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