Bitcoin (BTC) Price Dips Again, Eyes Critical Support
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Bitcoin (BTC) price plummeted to below $35,000 over the weekend to its lowest point since July 2021. The world’s largest digital asset now trades over 50% lower compared to the record price it reached last fall.
The drop occurred shortly after the stock market saw a sharp selloff on Thursday. Bitcoin and stock prices continue to see a strong correlation as investors show their concerns over the impact of the Federal Reserve’s expected interest-rate increases on the markets.
“Cryptocurrencies are no longer an isolated risk asset and are responding to changes in global policy,” said Clara Medalie, research director at crypto market data provider Kaiko, to WSJ.
“It’s not surprising that both will start to become more volatile as the liquidity taps turn off.”
The correlation between the two markets is at its peak since September 2020, as per Kaiko’s data. What this actually means is that when the stock market falls, there’s a strong chance that Bitcoin will drop as well.
This ongoing trend may be a result of the widespread adoption of crypto assets, making them more responsive to stock market drops.
Apart from the drop in Bitcoin, shares of Netflix also plunged 20% Friday, wiping off more than $40 of its market value after the streaming giant reported it expects to add a significantly lower number of subscribers this quarter compared to a year ago.
Analysts believe that the drop in tech stocks could push investors to liquidate positions in crypto assets to prevent large losses and address margin calls.
“We’ve seen exactly that happen before. Bitcoin being such an excellent store of liquidity makes it so that it is drawn on in times of margin calls,” said Chris Bendiksen, head of research at CoinShares.
The 100-WMA comes in at $31,600 and is likely to provide critical support to Bitcoin and other digital assets. Moreover, a strong block of support is located around the psychologically important $30,000 level.
By Senad Karaahmetovic | [email protected]
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