The crypto market was thrown into panic mode when Bitcoin plummeted by nearly 8%, and altcoins followed after. The scare sent a lot of traders to panic sell while others recounted their losses as Bitcoin dragged down to the $25k range.
The recent drop in Bitcoin's value was likely caused by a combination of factors, but it's hard to identify a single cause. Some experts have suggested that SpaceX's sale of Bitcoin and Evergrande's bankruptcy announcement could be contributing factors, among others. Let's explore these possibilities further.
Elon Musk's SpaceX Selling off Bitcoin Holdings
According to reports from The Wall Street Journal, the recent drop in Bitcoin's value may be linked to SpaceX, which reportedly had $373 million worth of the cryptocurrency on its balance sheet in 2021 and 2022. It is speculated that Elon Musk, the CEO of SpaceX, may have sold off some or all of the company's Bitcoin holdings, which caused the sudden price drop.
However, it was pretty sudden when it made breaking news that Elon Musk and his space company had sold out their Bitcoin. Despite the lack of confirmation, many crypto traders have bought this news. For instance, crypto analyst Joe Burnett believes that Bitcoin's price decline was due to the sell-off from SpaceX.
"Traders are now bearish that coins are in stronger hands. Illogical. Every day presents an opportunity to stack #Bitcoin for the long haul of 4+ years, but today stands out as an especially auspicious moment," he said. However, there are no confirmations whether SpaceX sold this year or not.
XRP SEC Appeal
There are also speculations that the recent permission granted to the Securities and Exchange Commission to appeal to the Ripple partial ruling is a contributor. Apparently, Judge Torres gave the US regulator the right to make the interlocutory appeal.
The Securities and Exchange Commission has up to September 8th to make this appeal. But it seems as if it negatively impacted the market. Already the market has proven to react to Ripple lawsuit news. We can see it when XRP was declared non-security.
Minute Release From Last Fed Reserve Meeting
Many crypto traders and analysts also point to the last minutes Fed Reserve released as the cause of the latest dip in Bitcoin price. Some content in the minutes opined that future interest rate increases might be necessary.
Whenever the Fed Reserve minutes say future rates might be necessary, it usually impacts risk sentiment and causes a drop in Bitcoin's value. It seems like this was the case, as there was a massive negative drop in Bitcoin's risk sentiments, causing many traders to sell off their holdings.
Recently, Coinglass released data indicating that around $823 million in long positions were liquidated in the cryptocurrency market. Out of this amount, Bitcoin accounted for over $488 million while Ethereum accounted for $303 million.
Evergrande Declaring Bankruptcy
Another prominent major contributor to the ongoing Bitcoin crash today is China's Evergrande, a major property giant, filing for bankruptcy protection. Apparently, many people asked why they didn't do so in China—instead, they resorted to taking the steps under Chapter 15 of US bankruptcy law.
Nevertheless, this is seen as a massive contributor to the ongoing Bitcoin crash today. Already, crypto price analysis isn't needed to know that the price of cryptocurrencies tends to drop whenever a big financial company goes bankrupt. It can be seen in the case of FTX, Terraform, and even the Silicon Valley Bank scandal.