Bitcoin (BTC) continues to show numbers in the red, after lowering its price to USD 34,000, causing the cryptocurrency market to lose USD 200 billion in capitalization.
The leading cryptocurrency in the last 24 hours has dropped its price by 3.68% and 9.34% in the last seven days. These negative numbers are also observed in other digital assets such as ether (ETH), Ethereum ‘s native cryptocurrency , which has dropped its price by 7.93% in the last week.
The depreciation of bitcoin has led to the market loss reaching levels of July 2021, when the market cap dipped as low as $1.2 billion, as detailed by CoinMarketCap.
Although a recovery can be observed, which has taken the capitalization to USD 1,800 million. However, the cryptocurrency continues to have a negative behavior that has not been seen since 2014 , until last Friday it was five consecutive weeks down for BTC, as reported by GLM.
Everything seems to indicate that bitcoin could reach six weeks down. So far, it has never reached seven weeks in negative numbers.
Fear invades traders and the traditional market
The sustained fall in the price of bitcoin continues to increase extreme fear in traders. On May 6, the measurement went from 27 to 22. Today, May 8, that fear intensifies, reaching 18, according to Bitcoin Fear and Green Index , a platform that collects data from social media posts, surveys , volatility and trading volume.
That fear could also be seen in the stock market last Friday, when as a whole it had the worst drop since 2020 , losing 1,000 points of the Dow Jones index. This event was driven by investors’ fear of the US economic outlook in the medium and long term.
Both the cryptocurrency market and the traditional one have been greatly affected by this uncertainty generated by the government measures taken by the United States , after the increase in interest rates by 0.5%, announced by the Federal Reserve.
This ordinance corresponds to a resource implemented by central banks to restrict credit and stimulate savings. By decreasing consumption levels, theoretically inflation should decrease.
In mid-April, US annual inflation hit a record high of 8.5%, the highest in 41 years. Something similar happened in Europe when year-on-year headline inflation was 7.5% in April.
The increase in general inflation is a product of the conflict between Russia and Ukraine, which caused an increase in food and energy. The latter especially affects Europe, because many of the countries that make up the community depend on Russian gas supplies and now face economic sanctions.
what’s coming
According to analyst Willy Woo, the price of the cryptocurrency could continue to decline . However, he believes that the recovery in value will be quick and sees a long-term bullish behavior.
Woo suggests that we are seeing a supply shock structure developing, with very strong purchases of bitcoin that have not been reflected in the price. “This usually ends in a big bullish price squeeze,” he notes, warning that this may take time to develop.
In this sense, the market is facing a possible break in the support line for the year, which has been USD 34,000, although only time will show it.
For its part, the firm Ecoinometrics pointed out last week that bitcoin could reach USD 30,000 soon . This line would appear to be the minimum support it would reach, following a strong sell off by traders.