The cryptocurrency market is experiencing significant volatility once again, with major digital assets like Bitcoin (BTC) and Ethereum (ETH) seeing notable declines in value. This article delves into the 4 main reasons driving the current downturn.
1. Geopolitical Tensions in the Middle East
The recent crypto market decline coincides with escalating geopolitical tensions in the Middle East, particularly with military strikes in Southern Lebanon. This atmosphere of uncertainty has driven investors toward safer assets, impacting the broader crypto market sentiment.
2. Liquidation of Long Positions
Sharp declines in Bitcoin and Ethereum triggered widespread liquidation of long positions across the market. In just 12 hours, long positions worth $87.61 million were liquidated, intensifying downward pressure on prices. The total liquidations amounted to $102.22 million, with significant impacts on trader sentiment.
3. Arrest of Samourai Wallet Founders
The arrest of Samourai Wallet co-founders on money laundering charges by the U.S. Justice Department has reverberated through the crypto community. Allegations of facilitating illegal transactions totaling over $2 billion have sparked uncertainty among investors, influencing market sentiment.
4. Post-Halving Volatility
Historically, post-halving periods witness increased volatility due to uncertainty about Bitcoin's future supply and price impact. The recent Bitcoin halving on April 20 set the stage for market instability. Traders' anticipation of short-term fluctuations combined with external factors has intensified market volatility, contributing to the current downturn.
