Here’s Why Bitcoin Tumbled 11% in 24 Hours

The world’s largest cryptocurrency by market capitalization began to drop Thursday around 19:00 UTC (2 p.m. ET), following the lead of the equity market, which saw a sharp decline into the U.S. 4 p.m. close.

Here’s what analysts are saying is behind the fall in price:

1. Negative market sentiment

Bitcoin’s (BTC) fall in price is a simple continuation of the same trend that has been occurring in the last few weeks – negative market sentiment. “This sentiment is fueled by a slew of gloomy news that overwhelms any form of objective asset data,” said Jason Deane, analyst at Quantum Economics. Although Deane’s long-term outlook is positive, he thinks that the current price action will probably continue in the immediate/short-term, and that further downward pressure is possible. “Once fear sets in, it takes a while to break and you simply have to wait for capitulation before you can move back to “normalized” ranges.”

2. Leveraged long positions

Another reason, according to Ben McMillan, founder of IDX Digital Assets, is leveraged long positions, which exacerbated the sell-off into the Asian open on Friday. “This is nearly always the case with bitcoin,” said McMillan, who said that “$40,000 was an important support which has now turned into a resistance level and we could certainly see more downside over the weekend.”

3. BTC is moving in conjunction with traditional markets

Bitcoin and the broader cryptocurrency market as a whole is acting as a high-sentiment beta asset – meaning it is moving in tandem with the broader markets and is more impacted by the recent negative sentiment, according to Lucas Outumuro, head of research at IntoTheBlock. “Macroeconomic fears and poor technology company earnings have also exacerbated this correlation,” said Outumuro.

At press time, bitcoin was trading at $38,446, according to CoinDesk data.