Bitcoin (BTC) fell again yesterday afternoon and last night. We have warned before about a possible consolidation phase, but remember that consolidation just below resistance in an uptrend is usually bullish is. That said, this decline has been accompanied by the return of a heavy dose of anxiety.
Bitcoin price drops 3%
Yesterday morning the bitcoin price was still struggling with $46,700. For a moment it looked like price was about to turn this resistance into support.
By midday, bitcoin briefly hit a high of $47,000, but the price was rejected there and then began to drop sharply. Bitcoin then fell through $46,700 but found support around $46,000 last night.
However, bitcoin was also unable to maintain that and fell to $44,800 overnight. Bitcoin then started to rise again cautiously, but the price has yet to break above $45,500 and at the time of writing it falls to $45,300 on KuCoin and $41,500 on Bitvavo. Bitcoin is currently 3% at the min.
Where does the new fear come from?
The Bitcoin price drop is accompanied by red stock markets like the S&P500. These financial markets were affected yesterday by new pronunciations From Federal Reserve Vice Chairman Lael Brainard:
“The committee will continue to methodically tighten monetary policy through a series of rate hikes and will begin a rapid deleveraging process beginning with our May meeting.”
According to Brainard, who reports that the Fed will raise interest rates more strongly in May to counter rising inflation. Fear of this has already caused a lot of uncertainty among investors in recent months. Until the Federal Open Market Committee (FOMC) meeting in March, when it turned out that the Fed was still reluctant to make this hike due to the war in Ukraine.
That may now be coming to an end. More details on the March FOMC meeting will be released later today. The next FOMC meeting will take place in early May. The fear could increase even more and spread to the crypto market again. It is also possible that the European Central Bank (ECB) will do the same at some point, given the high inflation:
Eurozone inflation has moved to 7.5%, its highest level ever.
Meanwhile, the ECB continues to keep interest rates at negative levels with no normalization plans.
This is perhaps the biggest disconnect between monetary policy and rising prices that the world has ever seen. pic.twitter.com/RPhn1MsRR4
—Charlie Billello (@charliebilello) April 5, 2022
In addition, the stricter sanctions against Russia, which will be introduced after the recent shocking images from Ukraine, are also increasing fear and uncertainty in the financial markets.
Bitcoin Accumulation at All-Time High
However, there are also many positive signs for the price of bitcoin, especially reflected in the accumulation. MicroStrategy CEO Michael Saylor recently bought another mountain of bitcoin. Terra (LUNA) also continues to massively buy BTC for its UST stable currency. According to analyst On-chain College, the number of addresses with at least 1 BTC even has a its highest point reached 833,242. This has been increasing at a rapid rate since the beginning of last month:
The number of addresses with at least 1 #bitcoin has reached an all-time high with 833,242 addresses.
This metric has increased rapidly since the beginning of February 2022. pic.twitter.com/Vs051qmjqf
— OnChain College (@OnChainCollege) April 6, 2022
However, analyst IT Tech reports that he sees a significant influx of BTC to exchanges. That could add more short-term selling pressure:
— IT Technology (@IT_Tech_PL) April 6, 2022
Tomorrow the Bitcoin 2022 event will take place in Miami with many big names from the world of cryptocurrencies. That can cause a bit of exaggeration.
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We are in a bull market, many do not know it yet. pic.twitter.com/KZHT8v40dL
— Willy Woo (@woonomic) April 5, 2022