The Reason BTC Dropped According to Santiment

The latest drop in Bitcoin (BTC) was expected by most of the market participants, given the dust and haze after the FTX disaster. However, the cryptocurrency is still struggling to keep up with the selling pressure. The analysis company Santiment attributes the reason for the decline to the recent events.

According to the analyst firm, the reason for the first drop to $15,900 in two years is FUD, which stems from distrust of centralized exchanges that accelerated after the FTX disaster.

“#Bitcoin dropped below $15.8k for the first time in 2 years, and address activity spiked to its highest level in over 6 months. #FUD due to lack of trust in exchanges historically benefits the patient, as we see $BTC continue moving into self custody.”

Most investors in the futures markets liquidate their positions to withdraw their remaining funds and grow their portfolios. Such a massive increase in selling pressure at a time when the entire market was experiencing liquidity problems was an excuse to push the price of Bitcoin (BTC) to values ​​not seen in years. This is also confirmed by the spike in address activity, which is often seen during major stock market breakouts when investors move their holdings from third parties to their own custody accounts.

The reverse of this process usually happens as the market recovers and investors move their funds back to trading platforms to leverage and maximize profits or turn to alternative assets. From this point of view, the most likely scenario is that the market will continue to stagnate due to lack of liquidity and new entries. According to data from CoinShares, institutional investors still avoid investing in digital assets. This situation is unlikely to change until flexible monetary policy in the United States prevails and investors stop aversion to additional risk.