Bitcoin’s $4,000 drop baffles ETF experts

Bitcoin (CRYPTO:BTC) faced a sharp decline on Tuesday, dropping by $4,000 in just a few hours from over $62,000 to $58,000, causing widespread concern among traders and analysts.

The price dip led to the liquidation of 87,920 traders, with a total value of $320 million wiped out in the last 24 hours.

Despite a slight recovery, the market remains deeply in the red as Bitcoin returns to a support level last seen on August 19.

Benjamin Cowen, founder of ITC Crypto, noted that Bitcoin has again failed to break through its bull market support band.

He suggested that any sustained change in this trend might only come after future rate cuts.

On-chain analyst James Check compared the current market structure to that of 2019, highlighting similarities in the pattern of trading seen then and now.

In 2019, a three-month surge from $4,000 to $13,000 was followed by a prolonged period of sideways trading.

This year, Bitcoin's rally from $40,000 to $74,000 in the first quarter could similarly lead to months of stagnant price movements, potentially lasting until mid-2025.

The sudden downturn has puzzled ETF experts, who struggle to understand the wave of panic selling.

Nate Geraci, president of the ETF Store, remarked on the heightened level of fear among Bitcoin investors, noting that despite recent drops, Bitcoin is still up 40% for the year, outperforming the SP 500 by more than 20%.

Bloomberg ETF analyst Eric Balchunas was equally confused by the sell-off, questioning who would be selling after significant purchases by ETFs.

Ethereum (CRYPTO:ETH) also faced a significant downturn, falling by more than 10% from $2,700 to $2,400 before a minor recovery.

Other altcoins, including Solana (CRYPTO:SOL), Avalanche (CRYPTO:AVAX), Near Protocol (CRYPTO:NEAR), and Uniswap (CRYPTO:UNI), saw larger losses.

However, some traders view the market downturn as a buying opportunity.

Luke Martin, a crypto trader, noted that altcoins are at a level that could present a good buying opportunity, comparing the situation to Bitcoin’s 2020 summer surge from $10,000 to $60,000 over six months.

At the time of writing, the Bitcoin price was $59,311.05.