Bitcoin experienced a 5.7% decline in the last 12 hours, dropping from $70,000 to just below $66,000 during early Asian trading on Tuesday, where it found support.
Despite this drop, it has been trading within a range that formed five months ago at the end of February.
Analysts are trying to decipher the reasons behind this sudden shift in market sentiment following a recent high for the asset.
Possible Influences: Political Polls or US Government Actions?
On July 30, crypto trader and economist Alex Krüger noted a significant price drop following a Trump speech that had pushed Bitcoin to $70,000, suggesting a -5% decrease shortly afterward.
One theory is that this drop might be related to the performance of Democrat presidential candidate Kamala Harris in the polls.
“If trying to rationalize the move, I’d say it was a partial reflection of Kamala doing very well in the polls (polls, not betting markets). The Trump trade is long Bitcoin and long small caps. The Kamala trade is the opposite.”
According to The Hill, Trump’s lead in the polls had narrowed to 1.5% on July 30, with 47.6% against rival Harris at 46.1%.
Crypto trading can be brutal. Prices and euphoria were running high today into the US equities open, on the back of the Trump speech, $BTC reached 70K, and then there was a sudden -5% drop.
If trying to rationalize the move, I’d say it was a partial reflection of Kamala doing… pic.com/GLalHo8jo0
— Alex Krüger (@krugermacro) July 29, 2024
Another contributing factor to the decline was the movement of around 29,800 BTC worth approximately $2 billion by the United States government on July 29. This action followed Donald Trump’s statement that he wouldn’t sell any of the government’s Bitcoin reserves if he were elected.
The US government currently holds about 183,438 BTC valued at around $12.5 billion, according to Arkham Intelligence.
Trump: We will not sell any seized $BTC and allocate it to a strategic reserve.
Biden admin: pic.com/rqXePgKWtA
— Hsaka (@HsakaTrades) July 29, 2024
In a post on X on July 30, crypto analyst “Inmortal” suggested that the drop isn’t necessarily negative.
“But, the best thing that could happen to us is more consolidation. The bigger the consolidation, the bigger the expansion.”
Activity in Other Crypto Markets
The total market capitalization decreased by about 4.4% to $2.48 trillion at the time of writing. However, it has been relatively stable over the past five months.
Ethereum dipped from almost $3,400 to around $3,260 before bouncing back to over $3,300 during early Asian trading on Tuesday.
Other alternative cryptocurrencies experienced more significant losses, with notable declines in Solana (SOL), Cardano (ADA), Avalanche (AVAX), and Near Protocol (NEAR).
Image Source: H_Sutthichai / Shutterstock
