Why Did Bitcoin, Ethereum, and XRP Prices Drop, and Will the Decline Continue?

Summary: The recent plunge in Bitcoin, Ethereum, and XRP prices can be attributed to persistent selling pressure and looming macroeconomic factors. The market faces additional challenges with the anticipated interest rate hike by the Bank of Japan.

Key Takeaways

Continuous selling by Wintermute has led to significant drops in Bitcoin (BTC), Ethereum (ETH), and XRP prices.
Expectation of a rate hike from the Bank of Japan has heightened fears among crypto investors.
Historical data shows that prices often decline following Federal Reserve rate cuts.
A potential bear pennant pattern for Bitcoin may signal further price declines below $50,000.

Bitcoin

Reasons Behind the Price Drop of Bitcoin, Ethereum, and XRP

In a recent post on X, crypto expert Crypto Wimar explained that Wintermute has sold off 40% of its holdings over the past three weeks, which has significantly impacted Bitcoin, Ethereum, and XRP prices. Furthermore, Wintermute continues to offload millions in BTC and ETH on Binance, heightening the risk of further price declines for these cryptocurrencies.

Investor anxieties are also growing around the upcoming interest rate hike by the Bank of Japan, scheduled for December 19. According to Polymarket data, there is a 97.4% likelihood that the BOJ will raise rates by 25 basis points. Such a rate increase could add further downward pressure on the crypto market, as traders may liquidate their assets in anticipation of a stronger yen, which would make their debts more costly.

Notably, Bitcoin, Ethereum, and XRP have seen price drops following every Federal Reserve rate cut this year. The same pattern is emerging after the Fed lowered rates by 25 basis points last week. Prior to this decision, these cryptocurrencies experienced a significant bounce, suggesting the market anticipated the cut.

Institutional demand for Bitcoin, Ethereum, and XRP seems to be waning as well. Analytics platform CryptoQuant reported that the growth of Bitcoin in corporate treasuries is slowing down, despite 117 new companies adding BTC to their reserves this year. Among these, only BitMine has shown a strong momentum in accumulating ETH during this downturn.

Bitcoin's Risk of Falling Below $50,000

Crypto analyst Titan of Crypto has suggested that Bitcoin might fall below the $50,000 threshold, putting Ethereum and XRP at risk as well. In a post on X, the analyst highlighted the formation of a potential bear pennant, a pattern that is generally not welcomed in a bull market.

While this structure is still emerging, Titan of Crypto noted its importance for investors to keep an eye on.

Bitcoin
Source: Chart from Titan of Crypto on X

The accompanying chart from Titan of Crypto indicates that Bitcoin's price could drop below $50,000 as early as February next year. Veteran trader Peter Brandt has also expressed similar concerns, predicting that BTC will fall below this level due to the belief that it is already in a bear market.

Bitcoin
BTC trading at $89,900 on the 1D chart | Source: BTCUSDT on Tradingview.com