Why Is Bitcoin Down Today? What Usually Moves the Price

You open your app and Bitcoin is red. Down 4 per cent, or 8, or worse. Group chats fill with "what happened?" and "is it over?".

Most of the time, the cause is one of a short list. Knowing the list won't tell you where the price goes next, nobody can do that, but it will help you stay calm and make a decision instead of a reaction.

The usual suspects

1. Interest rates and the US economy

Bitcoin trades a lot like other risky assets. When markets expect US interest rates to stay high, or economic news looks shaky, investors often pull money out of risky things, Bitcoin included. Big days for this are US inflation releases and Federal Reserve meetings.

2. Liquidations: forced selling

Many traders borrow to bet on Bitcoin with leverage. When the price falls a little, the most leveraged positions are closed automatically, which means more selling, which pushes the price lower, which closes more positions. A small dip can snowball into a sharp drop within minutes. Our post on spot vs futures trading explains how leverage works.

3. Fund flows

Since Bitcoin funds called ETFs launched in the US, the money flowing in and out of them each day is watched closely. Large outflows can weigh on the price. Read Bitcoin ETFs explained for the background.

4. Headlines

A big exchange hack, a court case, a government statement, a large holder moving coins to an exchange: any of these can spark selling, sometimes before anyone knows the full story.

5. Thin weekend trading

Fewer traders are active at weekends and on holidays, so a few large orders move the price more. Weekend drops sometimes reverse on Monday, and sometimes don't.

6. Nothing in particular

Bitcoin is volatile. Some days it falls for no single reason. Our explainer on what makes crypto volatile goes deeper, and market sentiment plays a big part.

How to find today's reason in five minutes

1. Look at a reputable crypto news site and a general financial news site. Is there a rates, economy or regulation story?
2. Check whether liquidation totals were unusually large; they're widely reported.
3. Check if it's a weekend or a US holiday.
4. If none of these explains it, it's probably ordinary volatility.

Be careful with social media "explanations". The loudest posts on a red day are often from people selling signals or courses.

What it means in naira

Here's something many Nigerians notice: Bitcoin's naira price doesn't always move like its dollar price. That's because the naira price is roughly:

Bitcoin's dollar price × the dollar-to-naira rate

So:

• If Bitcoin falls 5% in dollars but the naira weakens 2% the same week, Bitcoin's naira price falls only about 3%.
• If the naira strengthens while Bitcoin falls, the naira price falls by more.

You can see the current figure on the Bitcoin to naira rate page. Our post on why the crypto naira rate differs from the CBN rate explains which dollar rate applies.

What to do on a red day

• Don't make big decisions in the first hour. Sharp moves often overshoot.
• Go back to your plan. If you have profit targets and a floor written down, follow them. If you don't, see taking profit on Bitcoin in naira and make one this week.
• Sell what you need, not what you fear. If rent is due, sell enough for rent. You don't have to sell everything.
• Don't borrow to "buy the dip". That's how small drops turn into big losses.

Whenever you decide to sell, KWIQ shows you the rate and naira amount before you confirm, swapping Bitcoin to naira is free, and naira hits your bank account in just 4 seconds. Download the KWIQ app, or sign up on the web.