Bitcoin has lost almost 10% of its value during the past 24 hours, falling below $30,000 for the first time since July 2021. And one analyst worries that the largest cryptocurrency might fall even worse.
BTC’s Tuesday decline is more than 55 percent lower than its November 2017 all-time high of $69,000. Year-to-date, Bitcoin prices have decreased by 34%.
Year-to-date, Bitcoin prices have decreased by 34%. The world’s most sought-after crypto asset plunged to $29,870.30 around 8 p.m. EST, TradingView data shows.
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Bitcoin Drop Correlated To Stocks
Traditional financial markets and cryptocurrencies both saw a sell-off as a result of the Federal Reserve’s aggressive monetary tightening and recession fears.
The last time the largest cryptocurrency by market value dipped below the $30,000 level was on July 20, 2021, when it reached $29,301 before rebounding.
As institutions have joined the Bitcoin and cryptocurrency markets over the past year, their correlation with stock prices has grown. Consequently, Wall Street is having a difficult day as tech stocks continue to experience significant selloffs. The Nasdaq index decreased by 4.3%.
BTC total market cap at $594 billion on the daily chart | Source: TradingView.com
Analyst Sees BTC Dropping Lower
Bitcoin could “perhaps receive a mini-bounce near $35,000, but unless we break the trend line at around $37,000, I’m predicting for $29,000 in the coming weeks or week,” says crypto analyst Wendy O in a new social media video.
Numerous cryptocurrency investors have suggested that Bitcoin is the digital era’s version of gold, a potential flight-to-safety investment and inflation hedge.
The price behavior of cryptocurrencies, however, implies that the market does not view these extremely volatile assets as reliable value repositories during times of economic instability.
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Crypto Market Feeling The Pinch For Weeks
Similarly to the stock market, the cryptocurrency market has been under pressure for weeks as investors cope with sustained growing inflation, the ongoing swirl of economic events deriving increasingly from Russia’s invasion of Ukraine, and stricter U.S. monetary policy by the Fed.
“Bitcoin’s long-term fundamentals are intact, but a recovery to record highs will take a very long time. Bitcoin will begin to stabilize when the carnage on Wall Street finishes, and many investors are still in panic-selling mode right now,” Edward Moya, senior market analyst at Oanda, stated.
The central bank increased interest rates by 50 basis points last week and pledged to shrink its holdings; instead of purchasing bonds to stimulate the economy, it will dispose of them to combat inflation.
The values of cryptocurrencies are quite volatile. Experts say this is something crypto investors will continue to face.
Featured image Pexels, chart from TradingView.com