- Bitcoin traders think that a drop to $38,000 will set off a small rally for the asset.
- The loss of value is one of Bitcoin’s worst start in a calendar year.
- Reasons for the slump have been attributed to the Fed’s proposed policy.
Analysts are scratching their heads in an attempt to understand the recent Bitcoin price movement. A section is keeping its eyes firmly on the $38,000 mark.
The $38,000 Point
As the news of the Fed’s plan to increase interest rates trickled into the mainstream media, the stock markets and the cryptocurrency markets tumbled. Perhaps, one of the most badly hit asset classes was Bitcoin as it lost up to 9% of its value in a single day. This left the asset sinking to lows of $41,000, far below the $48,000 point that it started the year with.
According to the Crypto Fear and Greed Index, sentiments indicate extreme fear at 15 points. The widespread sentiment is that the asset could be entering the throes of a bearish market with several analysts pointing out the similarities between it and the crash in May 2021.
However, other analysts have expressed confidence that the asset could bottom between the ranges of $38,000 – $40,000. Mike Novogratz, the CEO of Galaxy Digital believes this to be the case and that he is “waiting a little longer” to buy into the asset. The veteran investor thinks that there is a “tremendous amount of institutional actions on the sidelines” according to an interview with CNBC.
Rekt Capital thinks that a drop to $40K is in play for the asset after it “deviated from the blue 50 EMA” and is now on course to set a higher low.
Scott Melker, an analyst thinks that the asset is currently trading in the “golden pocket” between 0.65 and 0.618 Fibonacci retracement levels. “Price is currently in the golden pocket of the move from $28,600 – $69,000.”
Bitcoin And The Rest Of The Markets
Presently, Bitcoin’s market capitalization is less than $1 trillion, hovering around the $800 billion mark. The air has been rife with claims that the leading cryptocurrency is fast losing its grip on the entire ecosystem following the drop of its market dominance below 40%. For the most part of 2019, 2020, and 2021, Bitcoin’s dominance held up strongly above 40%, even reaching a high of 50%.
Altcoins have not fared better on their own ends. Ethereum, Polkadot, and Solana felt the pangs of the market crash as they all recorded double-digit losses. ETH has lost 13.10% over the course of the week while SOL and DOT recorded losses as high as 14.44% and 6.49% respectively. The general decline of altcoins casts a measure of doubt that the markets are in altcoin season.
The global cryptocurrency market capitalization stands at $2 trillion while the daily volume is down by as much as 18% at $105 billion.