After topping the $21,500 mark on Nov. 4, Bitcoin (BTC) price is down by 14% on Nov. 8, reaching a new yearly low at $17,166 — and most altcoins are following suit.
While the Binance and FTX news initially caused an uptick in the market, the day turned south as various unconfirmed sources speculated that FTX’s losses could show a $6 billion deficit.
This price decline breaks Bitcoin’s short-term correlation to the stock market, with the tech-heavy Nasdaq down only 0.32%, while the Dow Jones gained 0.48% on the back of investors’ optimism about the Nov. 8 United States midterm elections.
With the backdrop of the current volatility, $614 million in BTC longs are at risk of liquidation, with over $224 million liquidated on Nov. 8. The fear for many is that if the FTX situation is not resolved by Binance’s bid to purchase the exchange, a sharper sell-off in the market could trigger a liquidation cascade and send BTC price to new lows.
BTC long versus short and liquidations. Coinglass
Let’s investigate the main reasons why the Bitcoin price is down today.
FTX capitulates after investors’ fears of a bank run sap its liquidity
Bitcoin price is reacting to the stress placed on the market by FTX, reaching a yearly low after a period when many thought the bear market bottom had been found.
The May 2022 Terra implosion and ultimate collapse of LUNA — since rebranded LUNA Classic (LUNC) — produced the first seven-week losing streak in Bitcoin’s history. The market is drawing parallels between the current FTX bank run, the perceived large budget hole and what happened to Terra earlier this year.
Rising interest rates in the U.S. and abroad weigh on Bitcoin price
Based on the Consumer Price Index report, inflation in the United States increased by 0.6% in September.
The Consumer Price Index report — the most widely followed barometer of inflationary pressure in the United States — climbed to 8.2% in September 2022 from September 2021, slightly more than the 8.1% predicted by experts.
With the upcoming CPI reporting event on Nov. 10, Bitcoin saw a volatile 12% decline in 24 hours, hitting record lows for…