Bitcoin in free fall, -50% off all-time high

The sell-off in the stock markets also dragged cryptocurrencies with them, which halved from the highs reached at the beginning of November 2021. Hyperinflation, central banks embarking on a fast track to tighten monetary policy, and fear of an impending recession also resulted from the war in Ukraine they are at stake are both traditional lists (stocks and bonds) and the new generation (cryptocurrencies).

Bitcoin, the queen of cryptocurrencies, is now losing 3.4% to $33,438, which is practically more than half the value of the 69,000 recorded at the beginning of November last year. In a similar position, for example, Ethereum is today at $2,437, down 4% from the $4,652 level six months ago.

The wave of sales began last Friday with Wall Street under pressure again, the entire market lost, according to CoinMarketCap, more than $150 billion in capitalization that day. To believe that just a month ago, on April 5, the cryptocurrency opened at $46,614, but since then, between small and minor recoveries, the value has continued to decline. The Nasdaq, in turn, has lost 23.3% since the start of the year. Meanwhile, the Bitcoin Dominance Index is down 0.3% to nearly 42%.

According to XTB, the listed broker, “it will be necessary for the major cryptocurrency to rebound from this key level, around $33,600, which in the past served as a reaction zone, as a continuation of the downward movement could cause a domino effect across the sector.”

As XTB notes, it is closely associated with traditional investments such as technology stocks, “which in turn have found themselves in a difficult position, so it may take a rebound in general sentiment before we see an improvement in the performance of a particularly volatile asset like Bitcoin.”

Edul Patel, CEO and co-founder of crypto investment platform Mudrex, believes that there is a possibility that the market will now break the new support level “at $32,000. The downtrend we are seeing could continue for several days.” to explain.

Higher interest rates are the biggest risks for both the cryptocurrency and stock markets. The Fed has already raised the borrowing cost in the range by 0.75%-1% and in June Governor Jerome Powell is expected to raise it another 0.5%. But the markets are now pricing much more than the 80% probability of squeezing 75 basis points in one month. It would be a decision the US central bank hasn’t made since 1994 to counter hyperinflation.

The latest data from the US Labor Department on Friday indicated that employment growth remained strong in April, at a level that should continue the Federal Reserve’s concern about an overworked labor market since then, which could lead to a rise in wages. This will lead to more inflationary pressures forcing the Fed to tighten monetary conditions more quickly. Among other things, the central bank is expected in June to start shrinking the massive $9 trillion balance sheet that has ballooned during the pandemic in order to help companies survive the Covid wave and shutdowns.

This step, shrinking balance sheets, is already in itself a monetary tightening, to which the price increase will be added. The central bank will start selling its portfolio assets for $47.5 billion a month in June, July and August and then accelerate to $95 billion starting in September. Will the Fed End Bitcoin’s Golden Days? The market has been asking for this for the past few hours. (All rights reserved)

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