Bitcoin Drops $25,000 – What Happened to Crypto Market?
Bitcoin fell to $25,000 late Sunday night, thus reaching its lowest level since December 2020. Investors are reducing cryptocurrencies amid broader sales of risky assets. Meanwhile, Celsius’s cryptocurrency company has stopped withdrawing funds from its customers. This has led to fears of spreading to the broader market. The world’s largest cryptocurrency, Bitcoin, traded at $24,653.99 on Monday.
Over the weekend and Monday morning, more than $150 billion was deleted from the entire cryptocurrency market. Macro factors contribute to the decline in crypto markets; Prolonged inflation and the U.S. Federal Reserve may raise interest rates this week to control price increases. Last week, U.S. indices traded strongly; The technologically heavy Nasdaq plummeted. Bitcoin and other cryptocurrencies are correlated with stocks and other risky assets. When these indexes fall, so does the crypto.
Since November 2021, sentiment has changed dramatically as the Fed raised interest rates and managed inflation. A recession is also potentially under consideration; The Fed may need the demand side to overcome it to manage inflation finally.
All of this indicates that the market is not fully reached, and if the Fed cannot breathe, it may not see a return to prosperity. Bitcoin fell by about 80% in previous bear markets to a recent record high. This is a decrease of about 63% compared to the last all-time rate reached in November. However, according to experts, it may see much lower Bitcoin prices in the next months.
Bitcoin and the Crypto Market
The crypto market has also been on the brink since mid-May when now, the market is concerned about Celsius, which has stopped all withdrawals between accounts due to extreme market conditions. The company claims to have 1.7 million customers; Advertises to its users that they can get an 18% benefit through the platform. Users deposit their cryptocurrency in Celsius. This crypto loan is then transferred to institutions and other investors. Consumers then receive benefits as a result of the revenue generated in Celsius. But the sale of the crypto market hurt the firm.
The company’s website states that it had $11.8 billion in assets as of May 17, more than $26 billion in October last year. The CEL, which is Celsius’s coin, has fallen more than 50% in the last 24 hours. Investors are concerned about the broader spread of the crypto market. The markets were already under pressure due to inflation concerns and rising interest rates; However, crypto contagion events can lead to a significant drop. The market is closely related to various interconnected protocols and businesses these days.
The entire crypto market continues exacerbating losses on Monday after an unpleasant weekend. Several reasons add to the sense of risk prevailing in the financial markets to pressure the cryptocurrency market, including high leverage, scams and collapses like Terra, and attaching other stablecoins under pressure like Tron’s USDD. Hence, the unloading of such a historic rally continues. The big question is, where will Bitcoin and the crypto market end up? Popular crypto Twitter analyst and trader Rekt Capital has a potential answer; a 200-week moving average. The price of Bitcoin continues to bleed due to declining cryptocurrency market capitalization. Analysts believe that Bitcoin and Altcoins may decline further in the short run.
Justin Bennett, a leading crypto market analyst, told more than 100,000 Twitter followers that the ecosystem could witness a significant comeback when Bitcoin and Altcoins lose much of their value. Bennett believes that the price of Bitcoin is amid a decline from the pattern of continued decline, and $1 trillion is a psychological level for the crypto community. The crash occurred when more than 5% of the crypto market capitalization ran out; Nearly $950 billion has been drained from the ecosystem. Bennett predicted a 15% price adjustment for Bitcoin, where the asset would reach a new annual low of $23,500. Altcoins can lose 22.5% to 30% of their value.
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