The Bitcoin bullish streak which had maintained its brilliant trajectory in recent days seems to come to an abrupt end this Friday. The price of the main cryptocurrency plummets by more than 5%, reaching the US$68,000 area.
This marked decline occurs just one day after reaching its last all-time high at $73,700, leaving many investors bewildered after weeks of impressive growth.
As for the rest of the cryptocurrency market, Ethereum, the second largest cryptocurrency, has followed in the footsteps of BTC and registered declines of more than 4% this Friday, falling to $3,670, its lowest level in a week.
DWS analysts attribute this notable momentum for Bitcoin, as well as the cryptocurrency sector in general, to the recent approval of ten BTC ETFs in the United States since the beginning of the year. This institutional support has generated a sudden increase in investor confidence towards this market.
However, ETFs aren’t the only driving force behind cryptocurrencies right now. Investors are also optimistic about the next “halving” scheduled for April 2024.
Halving: the hope of the market
This process, which occurs every four years, involves halving the number of new bitcoins generated, which has historically driven prices upward and attracted new investments into the sector.
Despite these encouraging prospects, the volatility inherent in the price of bitcoin has left many investors on the “wrong side” in the past. Some experts warn that the recent drop below the $68,600 support could indicate future declines in price.
Additionally, the recent decline has reignited debate over whether the latest bullish surge in cryptocurrencies is indicative of a speculative bubble in global markets. Despite these concerns, bitcoin has achieved an impressive 70% appreciation so far this yearfrom its January lows.
The surprise rise in inflation data in the United States has affected demand for digital assets as it reduces expectations of interest rate cuts by the Federal Reserve. This scenario of higher interest rates for a prolonged period usually negatively affect risk assets such as cryptocurrencies.
Source: Ambito
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