Bitcoin’s amazing decline taking all cryptocurrencies with it, what opportunities should we seize?

Bitcoin has been going through a significant growth phase for some time now. On the other hand, an unusual trend seems to be emerging since late April 2024. In fact, there are fewer and fewer users and investors who respond.

A situation that seems to be widespread

Bitcoin (BTC) did not do well in April, as did most cryptocurrencies. Towards the end of the month, the price of BTC was around $63,000. At the beginning of May, the situation does not improve. Actually,BTC prices lost more than 7% in just 24 hours, that is, they have risen to $56,750. This reduction leads to an explosion of selling positions.

This sudden and sharp fall also has more pronounced effects on traders with so-called “long” or long positions. Over the last 24 hours, $464 million in positions were liquidated and buyers posted nearly $399 million in liquidation. Except, the drop affects all cryptocurrencies, especially BTC and Ethereum. Investors who bet on these cryptoassets reported liquidity of $164 and $116.6 million. Furthermore, most of these balances are also seen on exchanges, i.e. Binance with $64 million compared to $59 million for OKX.

What are the causes of this BTC decline?

Transactions completed have seen a significant increase in recent months as all factors have been favorable. However, we are currently witnessing a possible stagnation of activities at the blockchain level. On the other hand, this situation is the opposite of what was expected by all parties involved. Indeed, Bitcoin has done very well recently with over 350% since the end of 2022.

It is very likely that The main reason for this decrease is the explosion of transaction fees, which have been applied for several weeks consumer enthusiasm for BTC. When network fees are too expensive, users are much less motivated to transact on the Blockchain, leading to a reduction in the use of BTC.

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Despite the fact that the number of operations reaches a high level, the number of active addresses remains at a relatively low level. Although most of the actions performed on BTC come from the activity of protocolsHowever, this risks changing the information regarding the amount of operations and active addresses, as it does not necessarily indicate the use of Bitcoin as a value transfer or payment system.

So, these various factors could reinforce the behavior of non-responding investors. It could be that they are waiting for transaction fees to drop before starting again once users gain confidence in Bitcoin.

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