Crypto Market Crash Intensifies After $ 300 Billion Sale: How Far Can Bitcoin Prices Go?

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Top line

The price of bitcoin fell to a three-month low on Monday morning, continuing a decline that began when the Federal Reserve triggered a wide sell-off last week on warning that it could move faster than expected to reverse policy intended to supporting the economy during the pandemic, and experts predict that crypto’s latest downside could linger for weeks if the central bank’s hawkish stance becomes more aggressive.

Bitcoin fell below $ 40,000 for the first time since September on Monday.

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Bitcoin fell 5% to $ 39,692 at 9.45 a.m. ET, according to crypto data website CoinGecko, taking its losses to over 12% since the Fed warned on Wednesday it could act more aggressively. to remove stimulus from the pandemic era as it seeks to combat high levels of inflation.

In a weekend email, analyst Yuya Hasegawa of cryptocurrency broker Bitbank warned that he expects the world’s largest cryptocurrency to continue falling until the The broader market, which has also struggled since the Fed’s announcement on Wednesday, is digesting the likelihood that the Fed will raise interest rates as early as March. .

Although Hasegawa has said bitcoin could drop to as low as $ 40,000 in the near term, the analyst warned that the government’s report on the Consumer Price Index due Wednesday could intensify the price weakness if it. showed that inflation had risen more than expected, further justifying the Fed’s decision to ease stimulus and raise rates.

In a Monday note, Marcus Sotiriou, analyst at GlobalBlock, a UK-based digital asset broker, said he expects bitcoin to hover around $ 40,000, even though the report from Wednesday’s CPI shows inflation rose faster than expected last month, posing the recent sell-off. probably incorporated a lot of the negative expectations.

Crypto-billionaire Mike Novogratz, CEO of financial services firm Galaxy Digital, told CNBC on Thursday that the sale could push bitcoin down 8% from current prices to $ 38,000, an unprecedented level since the start. August.

“I’m not nervous for the medium term, but we’re going to have a lot of volatility over the next few weeks,” the avid bitcoin bull told CNBC, before highlighting the surge in institutional adoption as a bullish indicator of the market. nascent space. .

Tangent

Bitcoin was far from the only one to fall on Monday morning. Over the past 24 hours, the aether, the Binance Coin, and the soil have dropped 5%, bringing losses to around 20% each over the past week.

Crucial quote

“Bitcoin remains vulnerable to a breach of the $ 40,000 level, and it could get bad for the ether if it breaks the $ 3,000 level,” Oanda senior market analyst Ed Moya wrote in a Friday email. Ether prices hit around $ 2,985 on Monday. “The long-term outlook is still bullish for the two major cryptocurrencies, but the near term looks lousy.” Meanwhile, Novogratz wasn’t the only one among billionaire crypto investors to cheer bitcoin on during its last sale: “So much. A lot. Of money. Patiently waiting to [buy the dip] in bitcoin, “Barry Silbert, founder and CEO of crypto firm Digital Currency Group, wrote on Twitter on Saturday afternoon.

Vs

Despite episodes of intense bitcoin volatility, Goldman Sachs’ Global Forex Co-Head Zach Pandl wrote in a note to clients last week that the cryptocurrency could surpass $ 100,000 in the next five years. years. Pandl said he expects bitcoin’s share of the crypto market, currently around 41%, “will most likely increase over time as a by-product of the wider adoption of crypto. digital assets “and that cryptocurrency will increasingly compete with gold as a hedge against inflation.

Large number

$ 1.9 trillion. That’s the value of all the world’s cryptocurrencies on Monday morning, down more than $ 300 billion, or 14%, since Wednesday and more than $ 1,000 billion below the all-time high of $ 3 trillion. of dollars in November.

Surprising fact

Over the past five years, bitcoin prices have climbed almost 4,300%. However, the cryptocurrency is down almost 40% from the record high of $ 69,000 set in November.

Further reading

Major Cryptocurrencies Including Bitcoin and Ethereum Crash After Fed Minutes Signal Looming Interest Rate Hike (Forbes)

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