The world’s largest and most popular cryptocurrency remains Bitcoin (CCC:BTC-USD). As the world’s top token, investors have reason to watch this cryptocurrency very closely.
In many respects, Bitcoin’s price action drives the entire crypto market. As many may note, when Bitcoin sneezes, the entire market catches a cold. Such appears to be the case today.
Over the past 24 hours, Bitcoin has dropped more than 5%, at the time of writing. This move coincides with the price action of the overall market. This is not a coincidence — Bitcoin still makes up approximately 40% of the overall crypto market.
However, pinpointing the reasons for the daily declines in Bitcoin can be hard to do. Let’s dive into what investors are watching with this market-leading cryptocurrency today.
Why Bitcoin Is Plunging Today
It appears there are a few factors driving investor interest out of risk assets such as Bitcoin and into more safe haven assets today.
First, Bitcoin has seen the impacts (once again) leverage can have on crypto prices. A crypto futures selloff and mass liquidation was noted today, as the spot price of Bitcoin tumbled. This implies that leveraged positions on futures contracts continues to drive price momentum in the underlying token.
Additionally, risk-off sentiment and capital flows into more defensive asset classes appears to be taking hold today. Investors appear to be less willing to add risk, choosing to pull money out of the crypto market at a time when crypto prices are near all-time highs. Whether this is profit-taking or good old-fashioned portfolio management is unclear. However, it appears this risk-off sentiment over the past two months is something investors will want to keep an eye on moving forward.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.