What Caused Bitcoin (BTC) To Drop? Will It Start to Rising Again?

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Bitcoin (BTC) has been in a strong uptrend for the past few weeks. But earlier this day, on January 11, contrary to what was expected, Bitcoin started a downward correction.

The leading cryptocurrency has seen an incredible surge as incidents at the US Capitol last Wednesday pushed the relative strength index (RSI) into the overbought zone. As the BTC/USD parity broke $ 40,000 and forming an ATH near the $42,000 level, it suddenly started a downside correction below the $ 39,000 and $ 38,000 support levels. The price dropped nearly 18% in 24 hours to $ 33,000 levels.

With this unprecedented rise of Bitcoin, many cryptocurrency commentators have focused on the possibility of correction. This sharp decline may be the expected correction. According to the comments made, the common view of analysts is that such drops are normal when the price rises so quickly.

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Why Is Bitcoin (BTC) Price Falling?

If you have enough knowledge about the cryptocurrency market, you should be aware that the price may go further down when the downward corrections are not perceived proper by traders. Bitcoin (BTC) takes its value from demand and supply, and as the price begins to fall, the panic selling affects the market negatively. The first reason for the fall that started early in the day is probably the panic sale. As we just mentioned, in such extraordinary rises, a good correction in the market signals that it is moving firmly. The fact that the $ 42,000 level was not easily exceeded in the past period showed that Bitcoin needed a little more support before moving higher.

Why Did the Decline Start at the First Point?

Although it is not possible to give a precise answer to this question, one likelihood, for the time being, maybe the last Fed policy. Fed policy raised the yield on 10-year Treasury notes and 30-year Treasury bonds. Perhaps some investors decided to put their money to work earning a yield. While Bitcoin has risen this much, the decision-making by powerful investors may have affected the market so negatively.

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However, the Stimulus Plan Could Support Bitcoin

Americans received a $ 1,200 stimulus check in the last program and then, during the most recent plan, a $ 600 stimulus check per person. During that period, the Bitcoin price has almost gone into flight. According to the latest reports, US President-elected Joe Biden plans to distribute another $ 3 trillion for Covid-19 aid and infrastructure. Crypto advocates think that this $ 3 trillion stimulus plan could reflect positively on Bitcoin‘s price.

Will Bitcoin (BTC) Soar?

A continued stay above the $ 34,500 and $ 35,000 support levels could trigger a new surge. On the technical indicators currently underway, an initial resistance on the upside is near $ 37,000 and $ 38,000 levels. A break above these levels could further trigger a bullish surge of cryptocurrency. Bitcoin, which dropped to $ 32,000 during the day, is now recovering and trading above $ 35,000.

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Disclaimer: All information provided in the content is for informational purposes only and should not perceive as an investment, financial, or trading advice. Any investment decision you make should be a personal choice based on financial knowledge, experience, and market research.