Why Bitcoin Plummeted in 24 Hours

The world's largest cryptocurrency by market value began falling around 19:00 UTC (2 p.m. ET) on Thursday, closely following the stock market, which fell sharply by the close of trading in the United States at 4 p.m.

Here are the reasons analysts say are behind the price drop:

1. Negative market sentiment

The price decline in Bitcoin (BTC) is a simple continuation of the same trend seen over the past few weeks – negative market sentiment. “The sentiment is driven by a series of discouraging news that overwhelms any form of objective data on the asset,” said Jason Deane, an analyst at Quantum Economics. While Deane’s long-term outlook is positive, he believes that the current price action is likely to continue in the near/short term and that further downward pressure could come. “Once fear sets in, it takes a while to break and you just have to wait for capitulation before you can get back into the ‘normal’ range.”

2. Leveraged long position

Another reason, according to IDX Digital Assets founder Ben McMillan, is leveraged long positions, which exacerbated the sell-off at the Asian open on Friday. “As is almost always the case with Bitcoin,” McMillan said, “$40,000 was a significant support level that has now turned into resistance and we are definitely going to see more downside over the weekend.”

3. BTC and traditional market linkage

Lucas Outumuro, head of research at IntoTheBlock, said Bitcoin and the broader cryptocurrency market as a whole are acting as a high-sentiment beta asset — meaning it moves in sync with the broader market and is more affected by recent negative sentiment. “Macroeconomic concerns and poor tech earnings are also exacerbating this correlation,” Outumuro said.

Bitcoin ( BTC ) has failed to hold short-term support at $40,000 as sellers sustain a two-month-long downtrend.

Intraday oversold signals are not enough to sustain buying, which means that long-term indicators are more reliable in determining Bitcoin’s price direction.

At press time, BTC is trading around $38,000, having fallen by around 10% over the past 24 hours.

Slowing upside momentum on both the monthly and weekly charts has been a persistent theme since December. As the long-term uptrend weakens, sellers generally outstrip buyers, despite occasional oversold signals.

Additionally, when retracements (percentage declines from peak to trough) become severe, short-term traders tend to reduce position sizes and tighten trading parameters around intraday support and resistance areas.

Bitcoin is about 40% below its all-time high of $69,000, a significant retracement. The previous extreme of the decline occurred in July, when BTC closed around $28,000 after falling about 50% from its peak.

Currently, initial support is around $37,000, which could stabilize the current sell-off. The relative strength index (RSI) on the daily chart is the most oversold since May 19, following two months of sideways trading before a rebound.

If selling pressure accelerates next week, BTC may find stronger support around $30,000.