As panic emerges on cryptocurrency market, $15,000 is no longer unrealistic scenario

The most recent Bitcoin plunge has surprised most market participants because most of the dust settled after the FTX catastrophe. However, the first cryptocurrency still has trouble keeping up with the selling pressure, and Santiment has already described the reason.

This Is What Pushed Bitcoin Below $16,000 Threshold: Santiment

According to the analytical firm, the plunge to $15,800 for the first time in two years was caused by FUD due to the lack of trust in centralized exchanges that accelerated after the FTX drama.

Most investors in derivatives markets are liquidating their positions to withdraw remaining funds and deleverage their portfolios. Such a large spike in selling pressure at a time when the whole market is experiencing issues with liquidity is the perfect way to push the price of the first cryptocurrency to values unseen for years.

This thesis is also confirmed by the spike in address activity that usually happens during a large exchange outflow period when investors move holdings from third parties to self-custody. The opposite of this process usually happens when the market is rebounding, and traders move their funds back on trading platforms to use leverage and maximize their profits or gain exposure to alternative assets.

The most likely scenario from here is the continued stagnation of the market due to the lack of liquidity and fresh inflows. According to CoinShares’ data, institutional investors still avoid exposure to digital assets. The situation is unlikely to change until the stretch monetary policy in the U.S. prevails, and investors abstain from additional risk exposure. At press time, Bitcoin is trading at $16,000 and losing 1.5% of its value in the last 24 hours.

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