Bitcoin lost 3% to $33,256.3 on Monday in line with major equity indices across the globe, as the impact of monetary and fiscal policies invoke caution in investors.
In addition, the war between Russia and Ukraine along with the growing pandemic in China have been hurting investor sentiments worldwide. As a result of investors fleeing from equities, and risky assets, bitcoin, also faced the brunt of the negative reaction.
Bitcoin has maintained its downward trend, and it is now trading at $33,256, its lowest level since mid-January. Bitcoin has been dipping and crypto analysts predicted that price charts were indicating a bearish market as the cryptocurrency lost 17% over the last 5 days.
As is typical, this feeling has spread to the bulk of other cryptos, with Ethereum down 4.9% today, and more than 10% in the last week. Other large altcoins are also experiencing difficulties.
Bitcoin has remained between $35,000 to $45,000 for the past couple of months, however, the latest decline may be the start of a new trend for the alternative asset. Price indicators of Bitcoin pointed towards a bearish market over the last week said Coindesk.
If the price of Bitcoin falls below $32,951, it would hit a record low in July 2021 compared to all-time highs of $69,000 in late 2021.
A continuation of the current trend might have a domino effect across the industry, therefore it will be critical for the main cryptocurrency to rebound from this significant level, which previously served as a response region.
According to a report released by the US Labor Department on Friday, employment growth was strong last month, at a pace that should continue to worry the Federal Reserve about an overly tight labour market.
Wages may begin to rise as more firms fight for labour, adding to inflationary pressures and pressuring the Fed to tighten monetary conditions more quickly.
Bitcoin has recently reacted badly along with equities to the Federal Reserve’s more aggressive activities.
El Salvador and the Central African Republic have made Bitcoin legal tender in the last year. However, the International Monetary Fund has encouraged El Salvador to rethink its decision to allow consumers to use cryptocurrency alongside the US dollar in all transactions.
Walid Koudmani, Chief Market Analyst at financial brokerage XTB stated, “The majority of stock markets are trading lower in anticipation of upcoming monetary and fiscal policy changes from central banks across the world and as the pandemic situation continues to worsen in China, an event which has led to an escalation in lockdowns in several key areas throughout the country including the financial hub of Shanghai.”
“As a result, we are seeing a negative reaction across several asset classes including crypto currencies, which themselves have been struggling as of late. Bitcoin continued its downward move and after dropping over 15% is now trading at the lowest level since mid January as it hovers in the $33,600 area.”
“As is usually the case, we can notice this sentiment extending to the majority of other cryptos with Ethereum down 4% today and other major altcoins facing difficulty as well. It will be essential for the main cryptocurrency to rebound from this key level, which acted as a reaction area in the past, as a continuation of the downward move could cause a domino effect across the sector.”
“However, as we have been noticing a closer correlation with traditional assets like tech stocks, which themselves have been in a tough situation, it could require a recovery of the general sentiment before we see an improvement in the performance of a particularly volatile asset like Bitcoin.”