Reasons Behind the Sudden Decline in Bitcoin

Following the sharp pullback in the market on March 12, 2020, many investors began to question the reasons behind this decline. It can be said that there are several reasons behind the decline. It is known that the first of these reasons, which are the driving force for others, is the coronavirus , which has a global impact.

Countries that have experienced economic contraction with the coronovirus have taken many measures against the epidemic, but with the spread, many companies have entered into difficulties in production and distribution. Bottlenecked in managing cash flow, investors began to withdraw from the financial markets. CME’s decision to close the office in Chicago increased its seriousness after the situation caused hard selling pressure in crypto coins. Following this situation, which was seen as one of the reasons that would increase the selling pressure, the long positions loaded in the futures in the crypto money market were liquidated. At the same time, the main reason for this retreat, which is also seen in the stock market and commodities, is the flight from risky assets with the coronavirus and it seems possible to think that cash flow is lost to open positions in derivative markets. 

As a result of the global impasse that has occurred , it is known that many countries have made a breakthrough in blockchain and crypto money. Under normal circumstances, these breakthroughs can be expected to have a positive impact on the crypto money market in the medium term, but at this point, the economic conditions of the countries should be closely monitored. After the possible relief in the economy, the orientation to risky assets and the positive effect on crypto coins can be expected. 

Experts warn that in the meantime, the global economy and financial markets should be closely monitored. In this context, it is useful to consider that with the effect going negative, the withdrawal process may continue periodically. Since the relief that can be seen in the economy may increase the transition to risky assets, it can be expected that the reputation and demand will increase in crypto coins, the scope of which is detailed with the effect of the virus.