In the past 7 days, Bitcoin’s (BTC), price has fallen by nearly 30%. As macro-economic risks worsen, the number-one crypto in market capital fell below critical support. All global markets are showing a downward trend.
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Bitcoin is trading at $22,400 as of the writing. Lower time frames see a loss of 4%. This is the downside of price action on the pair, which has seen losses since March 2020.
The spread of COVID-19, along with the locking measures implemented by governments around the world to stop it from spreading further, caused the traditional and crypto markets to crash. Global liquidity was favored by the two-year global pandemic that halted economic activity in certain sectors.
This was due to central banks all over the globe. To prevent the world’s economy from collapsing, financial institutions grew their monetary supply.
This allowed for more money to be spent on goods and services. Some of that money went into crypto markets, so what was once a March 2020 market crash turned out to be a March 2021 rally as Bitcoin prices soared past $40,000 and reached an all-time high of $69,000.
As BTC’s price and other risk-on assets trended to the upside, and central banks printed more money, inflation skyrocketed and reached a 40-year high on the U.S. dollar. U.S. Federal Reserve is trying to end inflation and risk-on asset are being punished.
QCP Capital’s trading desk says that the current price movement is due to inflation exceeding market expectations and fear of the FED becoming more aggressive in its monetary policies.
QCP claimed, the FED has been hinting at a hawkish approach, what’s going to happen to Bitcoin and global markets if they decide to deliver it? The S&P 500 and the Nasdaq index are already trading at support:
At the FOMC meeting on Wednesday, there are talks about an increase of 75 basis points. Both the S&P and NASDAQ have also broken below last month’s low.
Bitcoin Impacted By Cascade Of Bearish News
The crypto market is suffering from bad news and macro-conditions. After the Terra (LUNA-UST) debacle, Binance, Coinbase and other large companies caused little recovery.
Celsius, an American-based crypto lender firm that has stopped any withdrawals of its customers, is the most recent. According to reports, the firm was insolvent when Bitcoin’s price and those of other major cryptocurrencies fell below $24,000.
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In that sense, QCP Capital believes $20,000 will operate as critical support for BTC’s price and $1,150 for Ethereum. The crypto market may lose two years of gains, and could return to the pre-COVID level if these levels fall. Similar things are already taking place in other traditional markets.