What Has Caused Bitcoin to Drop Below $60K Recently?

• Bitcoin’s price has decreased sharply from nearly $65,000 to under $58,000 recently.
• Despite the decline, BTC briefly recovered above $59,700, a 0.85% increase.

As the cryptocurrency market navigates a turbulent period, Bitcoin (BTC) has showcased a significant drop, moving from nearly $65,000 to below $58,000 in recent days. This downward shift has been influenced by a mix of factors, including market reactions to recent economic news and broader financial trends.

According to CoinMarketCap, Bitcoin’s price fell to approximately $57,974 late yesterday, after briefly surpassing $64,800 on August 25. Despite a brief recovery to around $59,700 at the time of writing, Bitcoin’s price has shown only a slight 0.85% increase in the last 24 hours. 

Traders likely triggered the initial drop in value by capitalizing on gains after Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole symposium sparked a temporary rally. Powell’s comments on the likely reduction of interest rates in September initially boosted the cryptocurrency market. Lower rates typically make riskier assets like Bitcoin more appealing compared to safer investments.

However, Bitcoin’s recent losses have erased the gains made after Powell’s remarks. Additionally, BTC’s price action has been affected by the recent performance of Nvidia Corporation. Nvidia’s stock saw a remarkable 160% increase in 2024, contributing significantly to gains in the Nasdaq 100 index.

Bitcoin Faces Continued Market Pressure and Long Squeeze

The digital asset has struggled to maintain its gains. Since August 5, Bitcoin has faced a challenging market environment, oscillating between $58,000 and $64,000.

The recent downturn in Bitcoin’s value has triggered a “long squeeze,” where traders have been forced to liquidate their positions as prices fell. This has led to a clear downward trend in Bitcoin’s monthly price chart, showing a decline of over 14%.

Over the past weekend, Bitcoin briefly reversed its downward trajectory, rising by 2% and reaching up to $64,000 from a low of $59,000. However, this rally was short-lived, and the cryptocurrency has resumed its bearish trend from Monday.

Looking ahead, Bitcoin is likely to face more pressure to break through current price levels. Then if the bearish trend continues, the next support level to watch is around $58,300. On the other hand, if BTC regains upward momentum, it could test resistance at approximately $60,580.

Technical indicators show that Bitcoin’s short-term 9-day moving average is $59,251, and the long-term 21-day moving average is $61,470. Both of these averages are higher than Bitcoin’s current price, indicating that the cryptocurrency is currently trading below its recent trends. The daily relative strength index (RSI) is at 23.62, indicating that Bitcoin is currently in the oversold zone. This could signal a potential price correction or rebound.