Why is Bitcoin (BTC) Price Dropping? This is the Answer!

Bittime - Bitcoin is experiencing extreme volatility. Actually, what is the factor in the decline in the price of this number 1 crypto asset? Check out the explanation in this article!

In the first week of August 2024, Bitcoin prices experienced a drastic decline of 30%. This crypto asset fell from its highest level of IDR 1,092 billion to IDR 772 million per coin. 

This phenomenon has sparked a big question among investors and market observers: Why has this asset known as "digital gold" fallen so deeply in a short time?

Bitcoin Price Drop Raises Concern

This sharp decline did not only surprise traders. However, this also raises concerns about Bitcoin's stability as a store of value in the digital era. 

Although many consider Bitcoin a bulwark against economic instability, this event shows that the world's largest cryptocurrency is still highly vulnerable to market speculation and macroeconomic factors.

Read also: Bitcoin Down, Here's BTC Price Analysis According to Experts

On August 5, Bitcoin experienced a price drop of 13% in one day, breaking through the key support level of IDR 942 million. This fall further accelerated the downward trend that had been going on for several days previously. 

Causes of Bitcoin (BTC) Price Drop

Analysts attribute this volatility to the decision of the Bank of Japan (BoJ) which shocked global markets on August 1 2024. For the first time in 17 years, the BoJ raised its benchmark interest rate. 

This marks a significant shift in monetary policy for the world's third largest economy.

This BoJ decision has a broad impact. Rising interest rates in Japan led to a strengthening of the yen against the US dollar, which in turn triggered a massive sell-off in high-risk assets, including Bitcoin. 

Investors are starting to shift their funds from more volatile assets such as crypto to more stable investments.

Apart from that, the "carry trade" phenomenon was also affected. The practice of borrowing yen at low interest rates to invest in high-interest assets in other countries is becoming less attractive. 

As a result, many traders were forced to liquidate their positions in US dollar-denominated assets, including Bitcoin. This is to cover increased borrowing costs.

Read also: Bitcoin ETF Cash Inflow $11.11 Million on August 15, 2024

The Fed's Decision Will Affect Bitcoin Prices

In the midst of this turmoil, the US Federal Reserve is also facing a dilemma. The choice between maintaining or lowering interest rates is a hot topic among economists. 

If the Fed decides to lower interest rates, this could be a bullish signal for Bitcoin. Falling interest rates often encourage more money printing, which can ultimately push up the price of Bitcoin as investors seek protection against inflation.

Despite this, Bitcoin has shown signs of recovery. The price of this coin has found support at the level of IDR 767.5 million and is currently stable at around IDR 900 million. 

Some optimistic investors see this situation as a rare trading opportunity, placing buy orders at lower levels, anticipating the possibility of Bitcoin returning to the low range of IDR 500 million.

This scenario reminds us of the "Black Swan" event in 2020. At that time, the price of Bitcoin fell 50% in two days due to the COVID-19 pandemic. 

Although the circumstances are different, the pattern of sharp declines in a short period of time shows that the crypto market is still very sensitive to external shocks.

For investors, this situation emphasizes the importance of understanding the broader economic context when investing in digital assets. Central bank decisions, global economic trends, and market sentiment all play an important role in Bitcoin price movements.

Key Levels for Bitcoin's Future Movement

Looking ahead, analysts identified several key levels to watch. Short-term support is at the level of IDR 764.4 million, with main support at IDR 499.2 million. Meanwhile, the short-term resistance level is at IDR 858 million, with greater resistance at IDR 942.2 million.

Despite short-term volatility, many Bitcoin supporters remain optimistic about the asset's long-term prospects. They argue that extreme price fluctuations are part of Bitcoin's maturation process as a new asset class.

However, this event is also a harsh reminder that the crypto market is still very young and prone to volatility. For individual investors, diversification and careful risk management remain key in dealing with the unpredictable volatility of the crypto market.

Also read Bitcoin to Rupiah Calculator

How to Buy Crypto on Bittime

You can buy and sell crypto assets easily and safely via Bittime. Bittime is one of Indonesia's best crypto applications, officially registered with Bappebti. 

To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. Apart from that, also ensure you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application. Study Complete Guide How to Buy Crypto on Bittime. 

Monitor graphic movement of Bitcoin (BTC) price, Ethereum (ETH), Solana (SOL), and other cryptos to find out today's crypto market trends in real-time on Bittime.