What is the reason for today’s crypto crash?

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Today, the overall crypto market capitalization dropped just above $1.2 trillion, while yesterday it was above $1.2 trillion and on April 18 it was also above at $1.2 trillion.

As can be seen from this data, this is actually not a true collapse, but a retracement.

For example, the price of Bitcoin yesterday morning was above $30,000, but during the day it fell just above $29,000, and overnight it even fell to $28,600. . It then rebounded slightly to $28,900.

Ethereum price yesterday morning was $2,100, then fell to $1,970 during the day and $1,920 overnight. It has now rebounded slightly to $1,950.

However, while this is by no means a crash, just a turnaround, it may not be over yet.

The Reasons for the Current Crypto Market Crash

There are probably two main reasons behind this retracement.

The first, trivially, is that over the past few weeks prices had risen a lot, and in the first months of 2023 they had also risen very rapidly.

For example, Bitcoin was until yesterday at +83% since the beginning of the year, so much so that a retracement was possible. Ethereum was at +76%, but its price was up 12% in just two days after the 12% Shapella update.

Since the growth of the crypto market is never linear, a temporary retracement is often triggered after a period of rapid and steady increases, as it happens nowadays.

But there is also another reason.

In fact, Ethereum’s Shapella update has finally unlocked staked ETH after more than two years.

At first, this did not cause a wave of withdrawals, followed by a wave of selling, but this was also due to the fact that not all Ethereum staking pools allowed withdrawals as early as April 13.

Yesterday, for example, Binance, which is the third largest Ethereum staking pool in the world, allowed them, together with Lido, which is the main ETH staking pool, to allow them the first week of May.

Thus, it is no coincidence that the price of Ethereum returns to the levels before the update, i.e. those of April 11, because the withdrawal rush did not start as soon as the application of Shapella, some believed that the danger was averted.

Yesterday, however, the scenario that had been widely predicted for weeks materialized, except that it happened a week later than expected.

Main levels to remember

That said, it should be added that the current price levels of Bitcoin and Ethereum are actually of no concern at all, for now.

Just consider that ETH is currently priced higher even than April 11, and in 2023 is only lower than the price hit within days of the update.

A similar argument applies to Bitcoin, whose current price is fully in line with that at the end of March, lower in 2023 only than the price after April 9.

However, we must not forget that the retracement started yesterday could continue further, especially in view of the opening of withdrawals on the Lido.

Right now, the level to watch for Bitcoin would appear to be the $25,000 level, which is the one that, in theory, could serve as support for possible upsides.

Already in recent months, the rapid and steady rises in the price of Bitcoin have been interspersed with sharp retracements, such as the one on February 9 and especially the one in the first half of March, when it rose from $23,700 to $20,300. $ in just eight days.

These are not true collapses, but retracements that do not even drop 20% of the market value. These are absolutely common and natural dynamics in an ever volatile market like cryptocurrencies.

An expected rebound after today’s crypto crash?

If the price of Bitcoin does not fall below $25,000 at this point, a rebound could be expected later.

For this hypothetical rebound, the attention thresholds seem to be three in number.

The first, of course, is a simple return to $30,000, reached in early April for the first time since May 2022. Such a bounce would not be particularly attractive.

The second, on the other hand, would already be more interesting, since the comparison with 2019 shows $35,000 by June as a possible goal.

The comparison with 2019 is very interesting, both because so far the two trends have turned out to be in some ways similar, and especially because 2019 was also a year of rebound after the post-bubble bear market of 2018. .

From this point of view, $35,000 is quite an important threshold, because if such a level was not reached before the end of June it would mean that the similarities with 2019 would be over.

But there is also a third threshold.

In fact, several forecasts converge on the fact that in 2023 the Bitcoin price would have a chance to move even towards $40,000. Not all analysts agree with this prediction, but the average seems to be exactly that.

Crypto markets will likely follow accordingly.

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