Investors are abandoning Bitcoin and other crypto at a moment when equity markets have plummeted from the coronavirus pandemic’s highs because to concerns about rising prices and a poor economic outlook. Inflation rate in The United States rose 8.3 percent in April, above experts’ expectations and approaching the highest possible level in 40 years, according to figures released Wednesday.
Bitcoin (BTC) fell below two critical support levels on Thursday as the market panic continued. While the most recent meltdown was directly caused by higher-than-expected US inflation figures, there were other factors pulling investors away from cryptocurrency.
Bitcoin Daily Chart
On the daily chart, the relative strength index (RSI) is severely oversold, as it was on January 24 of this year and May 20 of last year. However, in a decline, oversold circumstances might last for several weeks until a price rebound emerges.
The RSI is by far the most oversold on the weekly chart since March 2020, which foreshadowed a major rebound. Long-term impetus has weakened this time, implying limited upside above the high $40,000-$45,000 barrier zone.
According to analysts, Bitcoin’s latest slide reflects falls in IT stocks, with the Nasdaq down 6.4% this week. Bitcoin price today plummeted to a 16-month low, lying at $27,411.11 at the time of writing, down 9.89% in the past 24 hours.
Ethereum, the second most valued digital currency, has dropped to as low as $1,719.73. The token has fallen below $2,000 for the first time since July 2021. Ethereum was last trading for $1,936.07, an 11% decrease.
Hitesh Malviya, founder of IBC Capital and itsblockchain.com, stated that bear cycles are often longer than bull cycles, therefore good long-term price increase in the crypto market might take up to 1/2 year. And over 90% of cryptos will have died by then owing to a stability and circulation problem.
There are approximately $33 million in bid requests ranging from $39,000 to $38,000, implying that BTC might recover from here in the event of more price declines. To the contrary, $41,500 represents the possible most significant obstacle, with about $8 million in request orders. On the 4-hour chart, BTC is moving sideways.
The pressure is becoming more obvious across the crypto industry, with the largest stablecoin, Tether (USDT), beginning to show troubling symptoms that it is imitating UST’s demise.