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The Bitcoin price On October 21, the price briefly crashed below $67,000, although it quickly reclaimed this level as support before the daily close. This price drop is believed to be due to its correlation with the stock market, which itself also saw a decline.
Why Bitcoin Price Dropped Below $67,000
The Bitcoin price fell below $67,000, mainly due to its correlation with the US stock market. IntoTheBlock data shows that the correlation between the flagship crypto and the S&P 500 currently stands at 0.63, indicating a strong positive price correlation. The S&P 500 and the Dow fell from their record highs on October 21 ahead of earnings reports.
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The decline of the stock market and the Bitcoin price crash These are believed to be caused by uncertainty in the macro environment. This market uncertainty arises from rising inflation expectations and concerns about the way in which government spending contributes to this development. As such, market participants are currently cautious about their next move, with some waiting to see what moves will come next US Federal Reserve will do to keep inflation within their 2% target.
The upcoming US elections has also contributed to market uncertainty, especially as the presidential race between Donald Trump and Kamala Harris appears to be heating up. It is not unusual for traders to wait on the sidelines until after the election to gain certainty about the market’s prospects under the new president.
Other factors contributing to the price crash
Analyst Justin Bennett cited “open interest (OI) at all-time highs in July, whales shortening longs, and the perpetrator-driven rally this past week” as other factors contributing to the Bitcoin price crash. He claimed that these factors in addition to the upcoming US elections caused the price crash.
The analyst says about the impact of the American elections noted that markets typically reduce risks in the run-up to the US presidential election, which is now thirteen days away. He noted that it would have been a “calamity” if markets had not de-risked ahead of time and kept pumping on election night.
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Bennett made this statement, noting why he had expected a pullback for Bitcoin and other crypto assets. Indeed, the analyst has been stating since last week that the flagship crypto would soon undergo a price correction. He had previously said that he would not be surprised if the BTC price corrected approximately $63,000.
In a more recent one X messagehe highlighted the $65,800 range as the first test for the Bitcoin price. A hold above this level could invalidate his trading setup.
At the time of writing, the Bitcoin price is trading around $67,700, down almost 2% in the past 24 hours. facts from CoinMarketCap.
Featured image created with Dall.E, chart from Tradingview.com
