Bitcoin has experienced its worst week, and it may continue to fall during the Thanksgiving holiday?

Before this year's Thanksgiving, Bitcoin (BTC) and other major crypto assets have shown a weak market performance. According to the latest market data, Bitcoin has fallen over 30% since its peak on October 6, and as of Friday (November 22), the price of Bitcoin dipped to $84,535.40, marking the most significant decline since February of this year, when Bitcoin also experienced similar price fluctuations. Several analysts believe that the dumping situation will continue around Thanksgiving, coupled with the likelihood that The Federal Reserve (FED) may not cut interest rates, causing investors to jump ship to stem their losses.

Increased Fluctuation before and after Thanksgiving

Looking back over the past four years during the Thanksgiving period, the price of Bitcoin has experienced varying degrees of fluctuation, further highlighting the impact of seasonal factors and market sentiment on the crypto assets market. The price movements of Bitcoin, along with the correlation with other asset classes and changes in capital flows, especially the investors' expectations regarding interest rates and monetary policy, may have a significant impact on the market around Thanksgiving.

This Friday, Bitcoin closed down 2.1%, with a cumulative decline of over 10% for the week. Other major Crypto Assets also fell sharply, with Ethereum down 3.7%, Solana down 4.8%, and XRP down 3.3% (as of Friday at 4 PM). The sluggishness in the Crypto Assets market is mainly due to investor expectations that the Federal Reserve (FED) will not cut interest rates in the short term, combined with changes in capital flow, which have intensified the selling pressure on risk assets.

Despite the rebound in the US stock market on Friday, particularly with the tech-heavy Nasdaq index recovering from Thursday's sharp decline, cryptocurrency investors remain cautious and have not aggressively built positions in line with the stock market's rebound. This indicates that investors are still highly sensitive to risk assets and are reluctant to increase their risk exposure in an uncertain market environment.

Investors continue to sell off and suppress coin prices.

Bitcoin fell 2.1% on Friday, to $84,535.40 (as of Friday 4 PM). The cumulative decline for the week reached 10.3%. This is the worst performance since the last week of February when Bitcoin fell 11.4%. A simple explanation for Friday's disconnection in Bitcoin's price trend is that it has dropped over 30% since the high on October 6, leading to partial losses for many holders. Since Crypto Assets are often held in margin accounts, some may have to sell to cover losses, further pressing down prices.

Bitcoin may face more dumping.

Analysts at financial research firm Sevens Report pointed out in an article on Friday that, from a demand perspective, there seems to be a growing sense of concern in the market. If the selling pressure continues to intensify, this concern may evolve into widespread panic, as falling prices trigger more selling, creating a kind of vicious cycle. The recent plunge in crypto assets prices has been caused by multiple factors. Firstly, investors are uncertain whether The Federal Reserve (FED) will cut rates next month. If the FED keeps interest rates unchanged, the appeal of Bitcoin and its peer crypto assets compared to interest-bearing investments like bonds and savings accounts will decline. Secondly, due to the overvaluation of artificial intelligence, the market believes that now is a good time to sell off risk assets.

Many investors bought in when the price of Bitcoin was around 90,000 USD. Since the current price of Bitcoin is below that level, they may be reluctant to continue buying, especially in the case of investment losses, particularly if they borrowed money to purchase Bitcoin and are now facing margin calls. A margin call means that brokers will require investors to add funds to repay their loans. This, in turn, may lead to forced dumping, putting additional downward pressure on asset prices.

Adam Morgan McCarthy, the research director of the crypto assets data provider Kaiko, told Barron’s that liquidity across markets may dry up this week and as the holidays approach. If investors continue to close positions ahead of the holidays, further liquidity depletion could exacerbate price fluctuations. Don’t expect the downturn to stop here. Given that trading volume may thin out starting Thursday after the Thanksgiving holiday, prices could fluctuate significantly next week. This means that Bitcoin could continue to fall with just a small amount of pressure.

Although the current market sentiment is sluggish, Bitcoin and other Crypto Assets may still see a rebound in the future. The current selling pressure is significant, but Bitcoin remains a relatively long-term investment target. Due to its limited supply (the maximum total amount of Bitcoin is capped at 21 million coins), many analysts believe that demand will gradually recover over time, especially against the backdrop of global economic instability and a downturn in traditional asset markets.

However, in the short term, Bitcoin's price still faces significant challenges. Given the current market situation, the low liquidity before the holidays may exacerbate market fluctuations, and the future direction of the Crypto Assets market will depend on multiple factors, including the monetary policy direction of The Federal Reserve (FED), the global economic situation, and investors' attitudes toward risk assets.

This article discusses whether Bitcoin will experience its worst week and possibly continue to fall during the Thanksgiving holiday? Originally appeared on Chain News ABMedia.