Today the price of Bitcoin marked new lows, touching the lowest level in the last three months.
New lows for the price of Bitcoin
BTC fell below $32,900, and then continued to hover around the $33,000 mark.
To find a similar price we have to go back to 24 January, when it touched $32,900. This is therefore the lowest price level in all of 2022, for now.
Since then the price had almost always been above $35,000, with peaks above $48,000 at the end of March.
In reality, all financial markets are struggling today, even though the weekend was marked by the problems of UST, the stablecoin of the Terra ecosystem.
Up until Friday, the price was still above $35,000, but between Saturday and Sunday it dropped to current levels.
The concerns of the financial markets are linked primarily to the restrictive monetary policies of central banks, forced to withdraw part of the money injected in the past two years due to a level of inflation well above expectations.
Moreover, China’s economic problems are also weighing heavily, grappling with an upsurge of the pandemic that is leading to new restrictions that are also having a negative impact on its economy.
Four issues are currently weighing on crypto markets:
- the problems of the Terra ecosystem, which though seem to be receding;
- restrictive monetary policies of central banks, which drain liquidity from the markets;
- Chinese economic problems, which depress Asian markets;
- the war in Ukraine, which is still far from over.
Global uncertainties push the crypto market downwards
For this set of reasons, Bitcoin’s price is now 14% lower than it was a week ago, 22% lower than it was a month ago, and 52% lower than its peak in November 2021.
Other cryptocurrencies are not far behind, with Ethereum at -14% from seven days ago, and LUNA (Terra) at -27%. Of the top 10, the one losing the least is XRP, at -11% compared to a week ago.
The current level of $33,000 for Bitcoin is a key level: in case of a strong downward break the situation could become critical, with possible domino effect for the whole sector.
It is worth noting that in the last few days, Bitcoin has recovered 40% dominance, according to CoinGecko data, while Ethereum has dropped to 18%. Previously, it was 39% and 19%, respectively.
Some analysts speculate that in order to see a recovery, a general improvement in sentiment across all financial markets would be required, because a continuation of the current negative sentiment is unlikely to help the recovery of cryptocurrency prices.
A market analyst at Bitfinex said:
“We’ve seen renewed selling in bitcoin and the wider digital token market as the prospect of increasing interest rates and a deteriorating economic environment continues to weigh on risk assets. In Europe, equities are sharply lower, following the Nasdaq experiencing its sharpest one-day fall since June 2020. Investors exiting positions may be adding some momentum to the protracted sell off that we’ve witnessed over the past few days”.
Source: https://en.cryptonomist.ch/2022/05/09/bitcoin-lows-2022/