According to Bloomberg News, Bitcoin was found extending the current month’s losses on Monday trade as the investors stayed away from the risk assets amidst a hawkish outlook for the policy tightening of the Federal Reserve.
More on the downtrend of Bitcoin
The biggest digital currency, Bitcoin, dropped to as much as 3.2% to $38,236, recorded as the lowest since March 15th and down beyond 20% compared to last month’s high. The second-largest coin, Ether, slid as much as 4.8% to as much as $2,799, which is a level that has not been seen since March 18th.
The price charts indicate further declines are likely. Bitcoin has plunged below the Ichimoku cloud support on the weekly chart. The secondary support comes in around $27,200. She is not the only one to witness more downside.
According to Bloomberg News, Mark Newton, associated as a technical strategist with Fundstrat, noted down that it appears that Bitcoin is breaking a two-month key trend with Friday’s pullback, which is perhaps the cause of the weakness for testing the January lows. He is expecting a pullback which initially might be $36,300. However, any break of this kind must lead to a retest in full of $32,950 without a lot of hassle.
For all the losses that have occurred recently, the largest digital currency Bitcoin continues to remain amid the trading range and has held since the beginning of this year in the range of $35,000 and $45,000. The digital currency usually moves in tandem with the tech giant NASDAQ 100, which negatively correlates with the dollar.
With the Fed expecting to raise the rates by 50 basis points shortly to tackle inflation, a few of the factors that triggered astronomical gains in cryptocurrencies in the last couple of years are seen to move in the reverse.
According to a team from Nydig, revealed in a report on Friday that as it is becoming even more valuable to hold on to dollars, there will likely be few investors that will shift from Bitcoin to the dollar to gold. Just as there is a negative correlation between the Bitcoin to the dollar, there is a negative correlation between the largest digital currency and the real rates, which have emerged in the past couple of years.
Bitcoin will continue to be driven by fundamental factors like network usage and user growth. However, it is vital to understand the macro relationships that are evolving.
