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23.02.202117:02 Forex Analysis & Reviews: What is the reason for the sharp decline of cryptocurrency?

Bitcoin's numerous value records marked the previous weeks. The cryptocurrency market positively perceived the constant growth of the main digital asset. However, it stopped reacting and started to decline after bitcoin broke through the level of $ 58 thousand. This contradicting action served as the signal for the incoming market correction.

For the past three days, Bitcoin sharply fell to $ 46 thousand. Thus, this negatively affected the cryptocurrency market. Today, the main digital coins began to recover their positions by 12:00 Universal time, although it slipped by almost 25% in the morning. The XRP token declined to $ 0.4, but began to gradually rise in the afternoon with minor disadvantages.

Exchange Rates 23.02.2021 analysis

Ethereum fell to $ 1400 and began to recover its positions only in the last few hours and consolidated at $ 1535. It is now slowly moving up, settling at $ 1520 area.

Exchange Rates 23.02.2021 analysis

Litecoin, in turn, stopped at $ 166 and then returned to its previous level after slightly rising to $ 175. It is now making an attempt to consolidate in the range of $ 170 - $ 175.

Exchange Rates 23.02.2021 analysis

Although most forecasters expected a price correction in early spring, the question arises: what caused the market drawdown and liquidation of the record volume of positions on crypto exchanges today? The reason lies in Bitcoin's worsening situation, which affected the price correction and led to a market collapse. The final breakthrough of the leading cryptocurrency has already occurred under unfavorable circumstances: problems with the Tether stablecoin and outright criticism from Elon Musk, JPMorgan experts and the US Treasury Secretary.

Due to the unpleasant news, Bitcoin failed to consolidate in safe positions and declined by $ 10 thousand, dropping by 12%. The main issue of the cryptocurrency is high volatility, which negatively affected the coin's quotes when it tried to settle at the level of $ 55 thousand. Moreover, there are several hints pointing to the correction in the digital asset market for about a week: the market collapsed several times in three days, the main altcoins did not show significant growth with good Bitcoin positions. All this provoked a sharper-than-expected market decline.

At the same time, the cryptocurrency market plummeting by 25% was possible due to the coincidence of two factors: Bitcoin's unhealthy growth in a negative economic situation and the forthcoming market correction. Such a surge cost traders more than $ 4 billion, but there is no fundamental reason for the price correction that would negatively affect market's development in the future. Rather, this happened for technical reasons and a specific economic situation, which contributed to the quote's decline.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Artem Petrenko,
Analytical expert
InstaForex Group © 2007-2021
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