The leading cryptocurrency Bitcoin is falling rapidly, dragging the crypto market with it. BTC, which fell below the critical support at $ 40 thousand, fell below $ 36 thousand.
David Lifchitz, managing partner and chief investment officer of ExoAlpha, who analyzes Bitcoin price action from a purely technical point of view, pointed out that Bitcoin's giant head and shoulders model has been completed.
Lifchitz said that Bitcoin will definitely fall to the level of $ 31 thousand, and the possibility of falling to $ 20 thousand is among the possibilities. Lifchitz claimed that the Fed's tightening policy, pressure in the European Union to ban cryptocurrency mining due to energy concerns, and sales in the market were effective in the collapse of Bitcoin. The expert also stated that the Omicron variant created a great uncertainty on the global economy.
Cryptocurrency analyst Scott Melker also highlighted the importance of Bitcoin recapturing the $39,600 support level. Cryptocurrency exchange Huobi experts believe that the BTC price will drop this year as Bitcoin will enter a bear market and global markets will react to the US Federal Reserve's refusal to buy assets. As we know, in general, when Bitcoin drops, the entire crypto market is affected, negatively affecting the price of all other altcoins including Ethereum.
Contraction refers to the process by which the Fed slows its purchases of new assets, including securities and bonds. According to Huobi experts, the contraction of the Fed and the increase in interest rates could cause global liquidity to shrink and ultimately affect the price of Bitcoin. The following statements were included in the report published by Huobi's research arm, Huobi Research Institute.
“Fed contraction is likely to result in a reduction in global liquidity or money entering the global economy this year. Like many other high-risk assets, Bitcoin is often sensitive to changes in liquidity. As such, Bitcoin is in a position where the security faces a prolonged price drop.” will face a “bear market”.
Recently, BTC has been in high correlation with the stock market. Wall Street fell significantly on Thursday. The Nasdaq is down almost 5 percent this week, while the S&P 500 is down for the third week in a row. US 10-year treasury yields rose earlier this week, with rising rates forcing investors to abandon their positions in riskier assets like Bitcoin. Yields move in the opposite direction to prices. The US Fed contraction is bad for unregulated markets like cryptocurrencies.