Over the last week, the crypto market witnessed a broad-based downturn. Bitcoin too fell below $42,000. Bitcoin’s fall started from an initial level of $48,000 and headed towards the $ 40,000 mark.
However, ETH and other altcoins later rose – measured based on their market capitalization. Despite the rise, the levels were still well below last week’s level.
The fall can primarily be attributed to the Fed’s announcement that it planned to tighten monetary policy sooner than was originally expected. The Fed indicated that it planned to raise interest rates to correct the imbalance in its balance sheet.
The hawkish sentiment in the market forecast a rate hike as early as Mar 2022.
BTC’s Market Trends
On Coinbase, BTC fell to a low of $40,505.30. This is its lowest level since Sep 2021. Data on Coinbase shows that BTC later rebounded to rise above 42,000.
BTC’s spot trading volume continues to be thin across most crypto exchanges. Even as the Asian markets open, there is still considerable uncertainty if the recovery seen thus far will persist. It is expected that the Fed’s tightening of the monetary policy might lead to BTC and ETH not exceeding the high of 2021 during a greater portion of 2022. BTC has experienced two months of downward movement marked by low-level highs. It went down by 9% over the last week.
The support price is approximately $40,000. This could cause the current recovery to stabilize. The rise might be capped at the $45,000 resistance level.
Continued selling might cause BTC to remain vulnerable. This is more likely if the buyers do not hold the $38,000 – $40,000 support level.
Analysts expect that BTC, in two weeks, will register a downside exhaustion signal. This will, in all likelihood, be followed by an upward trend in the price.