In the hours following Jerome Powell’s announcement to keep interest rates unchanged, Bitcoin and the broader cryptocurrency market experienced a significant correction, with Bitcoin shedding over 3.5% in just 24 hours. This decline has brought the flagship cryptocurrency closer to the $25,000 level. Consequently, the entire market has lost more than $40 billion in value, edging dangerously close to falling below the $1 trillion mark. Currently, $25,000 is considered a sturdy support level for Bitcoin. If it plummets further, it could likely descend to $23,500 or lower.
Crypto analyst Ali Martinez noted that Bitcoin is positioned precariously, with a crucial support zone between $22,785 and $23,595. This region is home to 1.34 million wallet holders possessing 450,000 BTC combined. Meanwhile, Bitcoin is grappling with formidable resistance between $26,000 and $28,250, a range where 5.18 million wallet holders bought 2.1 million BTC.
Throughout 2023, the link between Bitcoin and US equities has weakened considerably. After Powell’s speech, US equities closed flat, while the crypto market faltered due to the US Federal Reserve chairman hinting at two additional rate hikes later in the year. One aspect accelerating the market’s reaction is the existing liquidity difficulties following the SEC’s lawsuits against crypto exchanges Binance and Coinbase, forcing some banking partners to reconsider their relationships with the exchanges.
Altcoins have suffered even greater losses than Bitcoin during this downturn, with Ethereum, the second-largest cryptocurrency by market capitalization, tumbling more than 5.5% to dip below the $1,650 mark. Other leading altcoins, such as BNB, XRP, Cardano ADA, and Polygon MATIC, have all experienced a decline of over 6%. Bears appear to have a firm grip on the market, overshadowing the bulls, and how far this decline might extend is an intriguing question.
Ultimately, cryptocurrency enthusiasts should practice utmost caution when navigating the volatile landscape. External factors like lawsuits, interest rate fluctuations, and evolving dynamics between Bitcoin and traditional financial markets can have a profound impact on investments in this space. Staying abreast of market trends and exercising due diligence before investing in cryptocurrencies can make all the difference in securing financial success. As always, individuals and publications alike cannot be held responsible for any personal financial loss resulting from investment decisions in cryptocurrencies.
Source: Coingape
