Bitcoin prices have been dropping like a rock, and many believe that that algo trading may have made the selloff a lot more intense than currently it is. However, bitcoin is a volatile asset that can fluctuate up to 20% in a single day. The current sell-off in the price of bitcoin is attributed to three major factors. Here is more on this.

Market Crash?

When you look at markets today, there is only one thing that comes to mind, and that is if this is a market crash or if this is going to lead towards a major market crash. This is because the sell-off that we are seeing today is not only in the crypto market; it is across everything and anything, and the only common color is red.

To put things in perspective, the Nasdaq 100 index, also known as the tech 100 index, traded nearly 1000 points today and entered correction territory last week. When an index is down nearly 10% from its recent high, it enters a correction territory, and when the total decline from its recent high is nearly 20%, it enters a bear market. In total, the Nasdaq 100 index is nearly down 17%, which means that it is only three percentage points away from its bear market. As for the other two indices, the S&P 500 and the Dow Jones Industrial Average, the declines have not been that intense, as both are only down by 6 to 7% from their all-time high, and it is not really that big of a deal.

 So, one can clearly say one thing: the crash that is currently taking place is not only limited to the crypto market but is more of a universal one. However, the more important question for traders and investors is: Why is the bitcoin price really falling?

Why Is The Bitcoin Price Falling? 

There are three main reasons for the fall in bitcoin prices that have made many investors nervous. First, there is the US election. What we mean by that is traders are worried about the recent popularity that Kamal Harrison is gathering with respect to her position. Only a few weeks ago, no one was taking her seriously, and now she has raised billions in no time for her campaign. The thing traders are worried about here is that Kamal Harrison hasn’t shown any kind of robust support for the bitcoin price as Donald Trump has. Trump said that if he is elected as president, he will create a bitcoin reserve and will never sell bitcoin.

The second reason for the intense selloff is that Republicans, in an attempt to balance the famous Trump speech, moved all the confiscated bitcoin to a hot wallet worth billions just a few days ago. This sparked significant unrest among cryptocurrency traders, who feared that the government could destabilize the bitcoin price if it sold all the confiscated bitcoin at once. According to some reports, the government has actually sold some of the bitcoins, just like the German government did, which has intensified the sell-off.

The third and most important reason behind the current sell-off is that bitcoin, after its ETF approval, has been sitting in a lot of portfolios, and given the intensity of the sell-off that we have seen today, it is very normal for those portfolio managers to sell bitcoin in order to cover some of their margin call.

Bitcoin prices, which failed to record gains and instead built more losses on top of last week, are also in free fall today. When Donald Trump gave his speech at the Bitcoin conference, there was a lot of optimism around bitcoin and its future, as many traders were thinking that this will become the reserve currency of the future. Of course, all of this was predicated on the assumption that Donald Trump would become President of the United States of America and institute a national bitcoin reserve. On the other hand, the Republicans strongly oppose bitcoin. Following the conference, the government transferred a significant amount of bitcoin from various projects to a wallet, causing anxiety among investors. This was due to traders' belief that selling such a substantial amount would lead to a significant sell-off.

Should You Be Worried About the Current Sell-Off?

Holders know one thing very well, which is that bitcoin is a different kind of beast that you can't compare with any other assets. Taking a long-term view, they recognize the positive five- to 10-year trend in the bitcoin price. Consequently, they remain unfazed, firmly believing that the price will surpass the 100K threshold and continue to rise.

Algo traders, on the other side, love volatility, but they are aware of the fact that in times of higher volatility they need to make sure that bitcoin trading is taking place on reliable VPS, ForexVPS, as reliability and speed are the two most important components for them. They aim to avoid situations where the network goes down, they can't initiate their trades, or the original prices trigger their trades. A large number of bitcoin traders prefer the kind of days that we are experiencing now, as it gives them long daily ranges.