Bitcoin (BTC) was initially able to rally yesterday. However, the price subsequently plunged on a new dose of fear, although several analysts have already warned of a possible rejection. So far, the correction is not too bad, but Bitcoin could fall further.
Bitcoin price drops 3.8%
The price of bitcoin rose steadily yesterday morning. Bitcoin rallied to $42,000 and as the price broke through yesterday afternoon, Bitcoin rocketed to a high of around $42,900, its highest price in nearly two weeks.
However, bitcoin was rejected there. The price appeared to briefly find support around $42,500, but fell rapidly as well. Bitcoin then crashed as low as $40,500 and briefly dipped below $40,000 to $39,950. It was a drop of no less than 6.9%.
Last night bitcoin held around $40,500 and cautiously rose to $40,700 this morning. However, bitcoin is currently struggling with that, falling to $40,550 on KuCoin and $37,550 on Bitvavo at the time of writing. The price of bitcoin is today 3.8% at the minus.
Decline due to high correlation and fear.
While some analysts were already expecting a rejection at $43,000, this drop was also the result of a new dose of fear. Federal Reserve Chairman Jerome Powell delivered a speech yesterday at a panel of the International Monetary Fund (IMF).
Powell confirmed that the Fed is likely to raise interest rates by half a percentage point in May. This caused more traditional stock markets such as the S&P 500 and Nasdaq to turn red while the US Dollar Index (DXY) began to recover.
Since bitcoin is highly correlated with these stock markets and negatively correlated with DXY, BTC fell sharply. DXY is currently back at its all time high and the question is whether the price will break through this or get rejected.
Analyst firm Ecoinometrics believes that at some point these high correlations must come to an end. According to Ecoinometrics, it would help if Bitcoin is once again seen as a store of value. A market crash could also put an end to the high correlation.
These correlations are too high!
But don’t worry, Jerome Powell said the Fed will manage to squash inflation without triggering a recession. pic.twitter.com/x0ZOoiWsme
— ecoinometrics (@ecoinometrics) April 22, 2022
Bitcoin price returns to the starting point
The decline means that Bitcoin is now back to square one. The $40,700 is expected to hold and bitcoin soon a rebound does. Then the price could quickly retest the $42,500-$43,000 area and possibly the $44,500-$45,000 area after that.
However, several analysts fear that Bitcoin could fall much further. So the hope is that the area between $38,000 and $39,000 holds, otherwise it can get worse. bearish† That could lead to a drop to $35,000, $30,000 or even lower.
However, not everyone thinks that the price will drop so low. Meanwhile, bitcoin continues its trend of highest lows persevere. However, please note that low volume on weekends can sometimes lead to so-called false starts can drive.
weekly lines. pic.twitter.com/53HOhfRB0a
— Rickus (@rickus_trades) April 22, 2022
Earlier this week it was revealed that a record 64% of all BTC in circulation has not moved for over a year. As analyst Will Clemente points out, that’s a strong belief in bitcoin as a store of value in these uncertain times and red markets.
Despite the Nasdaq down 18% from its peak, a record 64% of Bitcoin’s supply hasn’t moved in at least a year.
Beneath the surface is a group of doomed HODLers who see BTC as their store of value amid unprecedented uncertainty in the markets. Quite remarkable. pic.twitter.com/CsmXvHXGAY
— Will Clemente (@WClementeIII) April 21, 2022
In addition, the analysis company Santiment reports that the Whales, investors holding between 100 and 10,000 BTC also accumulated significantly in the last two weeks. However, they still have much less than in October:
#bitcoin whale addresses with capacity from 100 to 10k $BTC have collectively amassed 18,104 more $BTC since April 10, the price falls below $40k. However, his holdings are still down substantially since October. Meanwhile $USDT purchasing power looks promising. https://t.co/9ydYeURT25 pic.twitter.com/gD9J64saO8
— Santiment (@santimentfeed) April 21, 2022
Crypto Insiders Premium for bitcoin analysis
Want to learn more about cryptocurrency trading, analysis, and use? Get in Crypto Experts Scoop and come take a look for free for the first 30 days. Ask analysts questions, chat with our avid community and receive technical and fundamental analysis every day!