Despite a robust increase on Thursday following the US Federal Reserve’s announcement of the largest interest rate hike in over 30 years, Bitcoin bulls faced severe resistance around $20,000 on Friday, causing the leading cryptocurrency to retreat abruptly on Saturday.
Bitcoin was trading at $19,362 an hour into Saturday’s London session, representing a 33 percent decrease in seven days and an 8.65 percent drop in the last twenty-four hours. On Saturday, the majority of alternative cryptocurrencies also saw losses. In the previous 24 hours, Ethereum, BNB, XRP, Cardano, and Solano returned 8.40 percent, 6.31 percent, 6 percent, 5 percent, and 6.76 percent, respectively. DOGE and SHIB both decreased around 6 percent.
Scott Minerd of Guggenheim forecasted at the World Economic Forum in Davos that the cryptocurrency winter might endure a long time, with Bitcoin’s price plunging below $8,000.
According to Coinglass statistics, approximately $287 million were sold on Saturday, with Bitcoin alone accounting for over half of that value. Gold(XAU) and the Dollar Index (DXY) moved up, whilst major US equities declined in tandem with the crypto market decline.
The market downturn may be traced back to macroeconomic uncertainty that has investors on the sidelines. In a meeting with Fed Chair Jeremy Powell on Tuesday, President Joe Biden emphasised that his government would give the central bank the “freedom it needs to combat inflation.”
Treasury secretary Janet Yellen said on the same day that she was mistaken when she stated last year that inflation was just a tiny danger, confirming suspicions that the Federal Reserve might tighten the recovery noose until something breaks. On top of an already broken market structure, this caused Bitcoin’s values to fluctuate, risking a larger price decline.
However, general conditions for all risk assets have been bumpy this year, with risk aversion maintaining the dominant theme. While May was a difficult month, Bitcoin’s conduct in June so far indicates that June will be much worse.
According to DailyFX expert Nicholas Cawley, Bitcoin must trade over $40,000 before any optimistic view can be established.
Kevin Svenson, a crypto chartist, asserts that the greater the BTC market capitalization, the more capital is necessary to shift the price. In the present environment, he believes that such funds could only come from Wall Street, indicating a greater link with the stock market.
Unfortunately, stock market investors are already submerged in their own woes, indicating that purchasing pressure on cryptocurrencies may not materialise.
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