Bitcoin broke out in a feeding frenzy during the January 24 afternoon, raking up over $37K after falling to its lowest point in the same morning. It’s almost as if they’re mirroring each other’s moves.
Bitcoin shot back up above $36,000 Tuesday morning after a day of heavy trading that saw the price drop below 33K for the first time since July 2021. Monday afternoon, it crossed $37,000 was staying pretty stable around 35k with some small increases here and there.
The crypto world has seen a lot of volatility over the last few years, but it’s still surprising when prices drop 50% or more. It has happened three times since 2018 alone! And this latest sell-off was no exception; from April through July 2019, Bitcoin fell 52%.
Cryptocurrencies have experienced major selloffs across the board, with cryptocurrency-related stocks being no exception. Analysts say that one primary driver of this trend is former Federal Reserve chairwoman Janet Yellen’s plan for stimulus removal and higher interest rate policies, which has negatively impacted many tech-related companies in recent months. For example, the Nasdaq has fallen 12% since January 1 alone.
“The Fed is currently buffeting the crypto market,” says Martha Reyes, head of research at Bequant. “This industry has been proliferating, and it’s not surprising that investors are taking risks with their capital.”
The decreased interest in crypto by retail investors is a sign that this market may have reached its peak. Glassnode, a blockchain data research firm, suggested there were two main reasons for the decline: regulatory uncertainty and low performance last year – both factors which will probably continue into 2022 as well.”
Bitcoin vs New Digital Assets
With the rise of NFTs, people are now more interested in investing their money into these new digital assets rather than Bitcoin. So it’s no wonder that people are starting to search for information on these non-fungible tokens. Google searches have shown a steady increase over last year, which is likely why we see more interest from investors worldwide as they seek out trends before others do.
Cryptocurrencies are down across the board, but some coins have fallen further than others. For example, ether is down 50% from its last high point, while Solana and Shiba Inu cryptocurrencies based on memes experienced even steeper losses with 64% and 74%, respectively.
Related Reading | Despite Decline In Bitcoin Price, Market Remains Greedy
Since November, the crypto market has lost about 44% of its value, with $1.65 trillion pulled down by widespread selling in both Bitcoin and other coins across the board.
Joel Kruger, a currency strategist, said,
“It makes sense to me for broad crypto to get hit hard. It’s all about innovation, which should correlate with risky assets.”
Crypto inevitably gets hit hard when innovation increases and risky assets follow suit. Sure enough, ether has followed this trend as well; it’s almost like an index for all these projects on ethereum – including NFTs, games, decentralized finance initiatives, or smart contracts – to see how they stack up against each other.”
The moves come as a surprise to some investors and analysts. Ryan Volden, an analyst from JPMorgan, predicted that Bitcoin could reach $146,000 in the future.
Traders To keep an eye on BTC $30K Level
Traders are focusing on $30,000 as a significant level for multiple reasons. First, that number represents the low point of last year’s bear market, and it also opened up close to where Bitcoin was trading in 2021 when we first saw prices fall during that period – which means there is some hope left.
It’s not just your investments that are at risk. For example, suppose Bitcoin falls below $5K. In that case, it will put Bitcoin prices into their 2020 levels and turn every investor who bought Bitcoins in recent months, as well as all those risking money on crypto markets, into losers.
With Wall Street panicking and a sell-off of Bitcoins reaching new heights, it’s essential to keep an eye on the $30k level. If this becomes unstable, more people may end up selling their coins, leading the market back down again.
Featured image from Pixabay, chart from TradingView.com