Hassan Maishera
TL;DR
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BTC dropped to $93k over the weekend, its lowest price in six months.
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Analysts are optimistic that Bitcoin will bounce back as the liquidity-tightening regime will end soon.
BTC Dips Below $94k
The cryptocurrency market was bearish over the weekend, with Bitcoin and other major coins recording losses. Bitcoin’s price dropped to a six-month low of $93k on Sunday, losing nearly 2% of its value over the last few hours.
BTC has since recovered and is now trading above $94k per coin. The bearish performance comes amid tightening liquidity, but analysts remain optimistic about a potential reversal.
The bearish performance comes as the crypto market saw $619 million worth of total liquidations in the past 24 hours, with $243 million coming from bitcoin. Furthermore, the crypto Fear & Greed Index fell to 10, signaling "extreme fear" in the market.
Analysts are optimistic that the cryptocurrency market will bounce back in the near term. Derek Lim, research lead at Caladan, told The Block that,
"In my opinion, the primary market driver remains liquidity. Liquidity is (and will be) temporarily tight as the U.S. government shutdown has kept the treasury general account elevated."
Lim added that he expects the bearish performance to reverse in the near term as the government spending resumes, while delayed payments are processed. This will re-inject liquidity into the system, allowing Bitcoin and other cryptocurrencies to rally higher.
The analyst added that Japan's 17 trillion yen ($110 billion) stimulus package, currently under consideration, could also boost global liquidity in the near term.
With Bitcoin currently in the red, altcoins are also underperforming. Ether is trading below $3,200 after losing less than 1% of its value, while XRP risks dropping below $2 if the bearish trend continues.
