Bitcoin leads the market free-fall: Why are cryptos crashing?

Be the First to Comment Read

Bitcoin leads the market free-fall: Why are cryptos crashing?

 Bitcoin leads the market free-fall: Why are cryptos crashing?
Image source: © Grejak | Megapixl.com

Highlights

  • On 9 May, Bitcoin was trading at US$33,627.67, as it was down by 2.51% in the past 24 hours.
  • Bitcoin is now 51% down after it achieved its all-time high of US$69044 on 10 November 2021. 
  • On 9 May, Bitcoin’s trading volume stood at US$36,99,67,15,374, according to CoinMarketCap.

The blood bath in the crypto market continued on 9 May as the crypto market witnessed yet another free fall, pushing Bitcoin's price below the US$34,000 mark. At the time of writing, Bitcoin was trading at US$33,627.67, and it was down by 2.51% in the past 24 hours with a volume of US$36,99,67,15,374 according to CoinMarketCap.

This was the lowest since its low of US$32,951 after January 2022. If it falls below the January low, it will hit a new low since its slump in July 2021. This is a significant change of scene for the leading crypto as it is now 51% down ever since it achieved its all-time high on 10 November 2021 of US$69,044.

Also read: The US$100-bn flash crash: Why are cryptos crashing today?

Other cryptos, such as Ethereum, also felt the pressure was down by 2.50% and was trading at US$2473.41. Similarly, BNB was down by 2.35% and was trading at US$351.56, and Solana was down by 2.20% and was trading at US$75.87 in the past 24 hours.

Crypto Name

Fluctuation

Current price

Bitcoin

2.51%

US$33,627.67

Ethereum

2.50%

US$2473.41

BNB

2.35%

US$351.56

Solana

2.20%

US$75.87

Source: CoinMarketCap (data as on 6:30 am GMT)

Why are the cryptos falling? 

Most cryptocurrencies have been in the bearish phase for some time now, primarily due to the investors preferring to adopt a wait-and-watch approach. Bitcoin, especially, after the several market participants seem to go into a selling spree. The Federal Reserve’s decision on monetary policies by increasing the interest rates by 50 basis points further dented the crypto market. 

On Sunday, Bitcoin had dropped below US$35,000 to sink to a low of US$33,878.96, but today's dip takes the leading token further down, resulting in the drop in the overall market cap. 

Image credit: Trading View

Due to the bearish market sentiments, the market seems to be reeling under the massive sell-off pressure. If we look at the chart, Bitcoin's RSI dropped from 38.13 on Friday to 30.73 on Monday. 

Even the MACD (Moving Average Convergence Divergence line) indicated that Bitcoin bears are in complete control of the market. Currently, the MACD line (in blue) showcases a downward slide, creating a significant gap between the signal line (in orange).

Also read: Why are DeFi attacks increasing by the day?

The recent slump has resulted in taking Bitcoin's support levels to the US$30,000 mark and the first significant resistance level at US$35,116. However, if one were to look at BTC's 50, 100 & 200 EMA (exponential moving averages), then it does indicate it may be able to achieve US$39,785.32, US$41,362.48, and US$43,244.53 according to Trading View.

Extreme Fear prevailing in the market 

The Bitcoin crash has resulted in extreme fear in the market prevailing. Since mid-April, Bitcoin has been witnessing anxiety and the latest drop has resulted in the Fear and Greed index displaying 11 according to data firm Alternative.me. 

Perhaps this could be one of the reasons that Bitcoin Funds saw its weekly outflow touch a record high in June 2021. According to data from digital asset investment firm CoinShares, the crypto funds saw net outflows totalling US$120 million last week. The CoinShares report highlights that approximately US$132.7 million worth of Bitcoin funds exited the previous week, bringing the month-to-date outflows for April to US$310.8 million.

This also seems to be changing investors' perception, as many countries are now becoming sceptical about investing in Bitcoin. The Central Bank of Argentina Republic had already said that it would prohibit banks operating in the country from opting for such high-risk asset offerings. Previously, the International Monetary Fund voiced similar views when El Salvador adopted Bitcoin as its legal tender.  

Conclusion

Overall, the market participants will hope that the crypto market can turn around its luck soon to gain some of the lost ground. Meanwhile, Bitcoin's volatility over the past week or so is creating a sense of panic in the market. 

With the market being in such a volatile state, potential investors must do their market research before jumping on the crypto bandwagon. 

Risk Disclosure: Trading in cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory, or political events. The laws that apply to crypto products (and how a particular crypto product is regulated) may change. Before deciding to trade in financial instruments or cryptocurrencies you should be fully informed of the risks and costs associated with trading in the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed. Kalkine Media cannot and does not represent or guarantee that any of the information/data available here is accurate, reliable, current, complete, or appropriate for your needs. Kalkine Media will not accept liability for any loss or damage as a result of your trading or your reliance on the information shared on this website.

Disclaimer

Speak your Mind

Featured Articles