Bears are in full swing in the cryptocurrency market, as the sector witnessed yet another wave of downwards pressure, essentially easing the accumulation from the past week.
It seems that Bitcoin, the world’s largest crypto, and its impact on the crypto sector are still severe, as the leading crypto dropped below $25,000 to a yearly low of $22,855.68, according to data from CryptoBrowser.
Bitcoin had a rough couple of months, but remained fairly calm, levitating around the $30,000 mark. However, the past weekend saw Bitcoin plummeting below the key resistance of $25,000 with ease before finding support at the $24,200 level.
Bitcoin’s fall began early on June 10, when the biggest crypto to date broke the accumulation phase and dropped to around $29,200. From that moment there has been nothing more than a downhill slide, which dragged the rest of the crypto sector with it, erasing $250 billion of the total market cap in just 24 hours.
Ethereum’s price action copied Bitcoin’s, and the altcoin leader also recorded a yearly low of $1,190.04 per ETH, before bouncing back to a current price point of $1,239.21 per ETH, which is 75% less than its all-time high of $24,176.78, recorded 7 months ago.
But why is the crypto market crashing?
According to some experts, the crypto sector is reacting to the next wave of interest rate hiking by the U.S. Federal Reserve.
“The crypto market has been under pressure from the Federal Reserve, hiking the interest rates to combat inflation over the past few months. Bitcoin, Ethereum, and most currencies suffered losses over the weekend after a broad sell-off following the data showing US inflation hitting a 40-year high,” Edul Patel, Co-Founder, and CEO of Murex noted.
Amit Gupta, founder and CEO of Fintrekk Capital, who also noted that the crypto wipeout is a global event, induced by the Fed’s hikes, echoed Patel’s opinion, adding that “central banks’ rate increases and the dollar index’s rise have resulted in decreased trading activity and price drops.”
“Coinbase, a cryptocurrency exchange in the United States, has released Q1 financial results that show a significant decrease in retail trades of cryptocurrencies although institutional trade numbers have remained relatively constant.” Gupta highlighted.
Are crypto investors still bullish?
Despite the several market crashes in the span of just two months, Bitcoin bulls are still optimistic about the largest crypto to date hitting the $100,000 mark. However, Bitcoin yet again showed its tight correlation to traditional stock markets, which could pose serious concerns about dependence on global economic conditions.
Nevertheless, historical data proves that Bitcoin is not new when it comes to highs and lows, especially after the past two bull runs. The first one pushed Bitcoin past the $20,000 mark for a brief period at the beginning of 2018, followed by a bearish year, and the latest run of November 2021, skyrocketed Bitcoin and managed to hit an all-time high value of $68,789.63 per BTC.
Is the crypto market cleaning itself?
It is hard to tell whether or not the bearish push would continue, or if the crypto market would revive itself. However, Bitcoin investors seemed to have panicked, as, since the beginning of the fall, investors are franticly liquidating their positions.
Should the fall continue, it would be less of a problem for the crypto market leader, but some altcoins, especially those with a lesser market capitalization, would suffer the consequences and may eventually not survive such market swings.