Bitcoin price continued its downtrend this week, dropping below the important support level at $65,000 for the first time since the first week of February. It was trading at $62,800 on Tuesday, down by over 45% from its all-time high. This article explores when the coin will bounce back eventually or whether the crash will continue.
Why Bitcoin Price is Crashing
Bitcoin price continued its strong downward trend this week as the recent dive gained steam. This crash coincided with the crash in the stock market, with the Dow Jones falling by over 800 points. The Nasdaq 100 and S&P 500 indices dropped by over 1% on Monday.
The drop happened two days after Donald Trump announced new global tariffs after the Supreme Court ruled against his previous ones. These tariffs have led to some confusion in the United States and with trade partners. For example, the European Union said that it would pause ratifying the deal it made with Trump.
READ MORE: CoreWeave Stock Faces Tailwinds and Risks Into Earnings
Bitcoin price crashed as the futures open interest continued falling, a sign the demand continued falling. The interest has tumbled to over $40 billion from last year’s high of over $95 billion. Tumbling futures open interest is a sign the demand among investors is waning.
BTC price continued its strong downward trend as the Crypto Fear and Greed Index tumbled ahead of a potential strike on Iran. Trump continued warning Iran that it might strike the country as soon as this week. Iran, on the other hand, has warned that any attack, no matter how limited it is, would lead to a wider war in the region.
A potential war in the Middle East will have a major impact on inflation because a third of all crude oil passes through the Strait of Hormuz. Also, Iran conducts attacks oil fields and terminals of countries close to the United States, like Bahrain and Saudi Arabia.
Additionally, Bitcoin has proven that it is not a safe-haven asset as it always drops when new risks emerge. For example, it tumbled sharply on October 10 when Donald Trump threatened new tariffs on Chinese goods.
Will BTC Price Recover?
Technical analysis suggests that the Bitcoin price will continue falling this month. It has remained below all moving averages and the Supertrend indicator. That is a sign that bears are in control today.
Therefore, the bearish flag pattern signals that the Bitcoin price will continue falling in the near term, potentially to the key support level at $50,000 as Standard Chartered analysts predicted.
BTC price chart | Source: TradingView
In the future, however, there is a likelihood that Bitcoin will bounce back as it has always done. For example, Bitcoin dropped to $15,500 in December 2022 as FTX collapsed, and to $4,000 in 2020 as the COVID-19 pandemic started.
In all these periods, it seemed like it was the end for Bitcoin and the broader crypto market. However, like a phoenix, the coin always bounces back and hits a record high. The same will likely happen later this year as investors start buying the dip.
READ MORE: NVIDIA Stock Price Forecast: Flashes Alarming Signal Ahead of Earnings
