The fact that bitcoin is at its lowest level in three months is now no news. It was in January that bitcoin’s price fell below $34,000, but it has held up very well since then. The low market momentum after the December 4th market crash was the reason for the last time. The lurching asset value is being driven by a completely different animal this time.
Stock Market: On the Rocks
Bitcoin’s correlation with the stock market had been on the rise in the past couple of months, eventually hitting a high point in the first quarter of 2022. The market movement of cryptocurrency has been influenced by this correlation for the past several months. The crypto market is mirroring the stock markets in multiple ways. This mirroring led to the downtrend.
The most notable is the fall in the NASDAQ. The Nasdaq, which is dominated by tech stocks has suffered a major market decline. The Nasdaq has seen a decline of 1.5% over the past week. It also lost 22% on a 12-month basis.
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Last week saw the Nasdaq go down, and so did the crypto market. The difference is that the fall in crypto markets has been much more severe. It’s easy to see why this is the case given that the largely unregulated crypto market remains more volatile than its stock market counterparts. Coins like bitcoin suffered losses of around 10% in the past week.
While stock market correlation was a factor in recent market crashes, it’s not the only cause. Recent market sentiment was declining, which has increased the fear factor in the markets. The crash was long anticipated.
Bitcoin’s Future
Because the cryptocurrency market follows bitcoin’s movements, it can be helpful to examine where the future might take us. The market saw more than $200 million removed from its total market capital, but there are indicators that indicate this may only be the beginning.
Multiple bull rallies for Bitcoin in 2021 were a rarity in this market. These rallying prices that had reached an all time high of $69,000 in 2021 have now subsided, and the market is heading towards the next bear.
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Bitcoin is trading at a lower level than any other significant indicator, both short- and long-term. Investors don’t believe bitcoin will recover above $40,000 in the near future, as it is currently below the 200-day moving mean.
BTC is now at the lowest support level of $36,000 and has lost its ground. Bears hold majority of market. After this crash, it is probable that BTC will drop below $30,000 before there is any recovery.
Featured image taken from TIME.com. Chart from TradingView.com.