Why did Bitcoin's price drop last night?
Last night Bitcoin dropped below $86,000.
Here are the main reasons summarized as follows.
(1) Global Market – Risk Off Mood
Currently, global markets are entering a risk-off state.
Money is flowing out of risk assets, including stocks and crypto. We are currently in a risk-off situation. Furthermore, we are cautious as we await the upcoming American economic data, which also contributes to the risk-off sentiment.
(2) Leverage Position Liquidation
There are many positions in the futures market that are entered with leverage and long.
When the price dropped, stop losses and liquidations occurred one after another, leading to forced selling, which caused the price to drop.
(3) Market Structure (Liquidity Hunt)
The market needs liquidity (fuel) to move from one place to another.
Just like a car cannot go without fuel, the market cannot move without liquidity.
Therefore, it can be considered that the market is coming to fill the lower liquidity where retail traders' stop losses are located.
Summary
📉 This time, the drop in Bitcoin price is
Global Risk-off
Leverage Liquidation
Liquidity Hunt
These factors have combined to create the situation.
The market constantly tests retail.
Without risk management, the market will teach you a lesson.
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