The cryptocurrency market has been on a rollercoaster ride as the price of Bitcoin (BTC) has fallen below $29,000, down from a 90-day high of $31,005 on April 14.
With the current market price of BTC at $28,949 as of April 20th, let us understand the factors contributing to this decline and its implications for the future.
Binance’s massive sell order and rising UK inflation weigh on market sentiment
The recent sell-off in the cryptocurrency market seems to lack a direct underlying cause. With that said, two major events may have affected investor sentiment.
First, an exceptionally large sell order on Binance raised concerns and added downward pressure on the cryptocurrency.
Secondly, the unexpected UK inflation figure for March of over 10% fueled concerns about rising global inflation and its potential impact on digital assets.
These events likely contributed to the bearish market sentiment and further influenced the downturn in cryptocurrency prices.
Regulatory concerns and market weakness
One of the significant factors in the recent decline of Bitcoin could be due to the growing regulatory uncertainty.
This concern was exacerbated when Securities and Exchange Commission Chairman Gary Gensler refused to answer whether Ethereum (ETH) was a commodity during a recent supervisory hearing with the US House Financial Services Committee.
Gensler’s evasion may have spooked investors and contributed to the bearish market sentiment.
The risk of inflation and rising interest rates
Another catalyst for Bitcoin’s decline was the statement of the Chairman of the Federal Reserve, who pledged to reduce inflation by raising interest rates.
With a commitment to lower inflation to 2%, the move is likely to impact cryptocurrency markets as investors re-evaluate their risk tolerance in the face of changing monetary policies.
Domino effect on other cryptocurrencies
Bitcoin’s decline is not an isolated incident; Other cryptocurrencies such as ETH and XRP have also seen significant declines.
Ethereum fell below $2,000 for the first time since April 13, while Ripple (XRP) suffered a drop of nearly 6% in 24 hours. With the global cryptocurrency market cap dropping by 4% to $1.22 trillion, the entire cryptocurrency market is under pressure.
Despite the downside, retail investors, often called the “shrimp” of bitcoin, increased their holdings, which now account for 6.7% of the entire circulating supply.
This rise in hash participation is a positive indicator of the long-term growth of the cryptocurrency market.
Bitcoin price prediction
With regulatory concerns, threats of inflation, and rising interest rates, investors must remain vigilant and make informed decisions.
Despite the current bear market, the outlook for Bitcoin remains bullish. BTC’s parabolic play is still in motion, and the current correction may be necessary for the next rally.
Popular analyst Captain Vibeck believes that the path to $38,000 is still reasonable.
At the same time, in the straightforward and informative chart analysis, two major elements have captured the attention of market watchers: the high range and the major support.
As the momentum builds, analysts predict that a break above the range could push bitcoin to new targets between $32,450 and $34,700, showing a promising outlook for the cryptocurrency.
However, staying informed and adapting to ever-changing market conditions is crucial. Remember to never invest more than you can afford to lose.