While the worst seemed to be behind us, Bitcoin has been falling again in recent days, dragging the entire altcoin market with it. A trajectory that worries and which even pushes certain observers to sound the alarm of a possible return to 30,000 dollars…
Bitcoin at the $40,000 threshold
If the two weeks between mid-March and the end of the month had been radiant for Bitcoin and the crypto market, it is clear that the weeks follow each other and are not alike. The following graph, accessible from the Coinmarketcap platform, shows the price of Bitcoin over the last 7 days.
Over the last 7 days, the mother of cryptocurrencies has experienced a drop of nearly 14%. While the token was moving close to $47,000 last Tuesday, raising hopes of a possible return to $50,000, the market once again took the opposite view from investors.
As of this writing, BTC is trading for $40,492. A price level that erases much of the rise that began in mid-March when Bitcoin restarted from $37,000.
After a few weeks of improvement, Bitcoin, therefore, seems to be falling back into its traps. The mother of cryptocurrencies has successively broken two levels of technical support: 45,000 and 42,000 dollars. Overnight from Monday to Tuesday, the token even fell below the psychological threshold of $40,000. During the day, BTC moved back above that $40,000 support level. For how much longer?
Towards a return to 30,000 dollars?
This movement, which began at the beginning of last week, could be the first element of an even more brutal decline. In any case, this is the opinion of Arthur Hayes, co-founder of the BitMEX exchange, who estimates that Bitcoin could return to close to $30,000 by next June.
An opinion that he justifies by the correlation observed between Bitcoin (and the crypto market as a whole) and the evolution of technology stocks on the NASDAQ. In other words, the cryptocurrency market would be strictly in line with the evolution of assets such as Facebook stock or Apple stock. A theory widely shared by equity analysts but also by their crypto counterparts.
If the correlation between the various risky assets is now in little doubt, Arthur Hayes puts forward macroeconomic arguments to justify his estimate of the price of Bitcoin.
With, first and foremost, the argument for an increase in the Fed’s key interest rates. Rises which could be made at a higher pace than that expected (or hoped for?) by the markets. As Goldman Sachs recently pointed out, which estimated that the FED could raise its key interest rates above 4%. Creating in the process less favorable market conditions for risky assets.
The rise in interest rates on government bonds from countries like Germany is also an explanatory variable for the fall in the price of Bitcoin. If this rise were to continue, it would invariably play on a continuation of the decline for the mother of cryptocurrencies.
Remember in passing that risky assets like stocks and cryptos tend to mirror bond yields.
Is it the right time to invest?
“Buy the dip….” This adage is often heard in the world of asset trading. Whether buying stocks or trading crypto, “buying the dips” is a fairly common trading strategy. It is still necessary to know how to understand a potential dip and detect any technical pitfalls.
Applied to the Bitcoin price, it is, therefore, difficult to establish whether this drop is just a simple correction of the upward movement that began in mid-March or whether, on the contrary, it is the first stone of a lastingly stronger movement.
Other altcoins like Solana (SOL) could also be credible alternatives to Bitcoin. As a reminder, Solana has been one of the main altcoins to underperform the market since last November. Investing in Ethereum could also be wise. Indeed, the second crypto value continues to outperform Bitcoin over the medium term.
To trade Bitcoin in CFDs or the main altcoins, the Crypto.com platform offers one of the most pleasant trading experiences on the market!