According to CNN, when the markets opened up in Asia on Friday morning, Bitcoin investors were in for a rude awakening. The world’s top digital currency had plummeted over $6,000 overnight, dropping from around $73,500 to $67,000 at one point – a decline of over 7%.
The broader crypto market also took a hit, with the CoinDesk 20 index of major digital assets falling 6% during the Asian trading hours. Data shows that over $100 million worth of leveraged long positions betting on further Bitcoin price rises were liquidated in just 12 hours as the selloff took hold.
Fading Fed Rate Cut Bets to Blame?
So what caused this sudden crypto crash? Analysts point to fading expectations that the Federal Reserve will cut interest rates anytime soon as a potential trigger. With strong economic data suggesting persistent inflation, traders are now doubting whether the Fed will pivot to lower rates to stimulate the economy.
“The recent surge in Bitcoin prices has been too fast for the market to digest properly,” said Greta Yuan, head researcher at VDX crypto exchange. “With less chance of a Fed rate cut, we’re seeing a correction as traders adjust their expectations.”
Some also speculate that uncertainty around next month’s Bitcoin “halving” event, where mining rewards get cut in half every four years, may be spooking markets and contributing to the volatility.
Just a Breather Before Resuming Uptrend?
However, many crypto watchers view the latest plunge as nothing more than a temporary pullback within an otherwise strong bull market for Bitcoin. As long as demand for spot Bitcoin ETFs remains high, indicating institutional investor appetite, analysts expect the overall upward trend to persist.
“It’s very difficult for these short-lived selloffs to put a lasting dent in the uptrend,” said QCP Capital, a Singapore crypto trading firm. They noted seeing strong demand from their clients for call options allowing them to buy Bitcoin at prices over $100,000 by year-end.
So while jarring for hodlers, Friday’s crypto crash may simply represent a brief bull breather before Bitcoin’s climb towards six figures potentially resumes in the coming months.
Related Stories:
Fidelity Macro Expert Says Bitcoin (BTC) and Ethereum (ETH) Now ‘Impenetrable’ Markets
US Bitcoin ETFs Roar Out of the Gate With $4.6 Billion in First Day Trading
Bitcoin Surges 4% Today, but These 3 Bitcoin-Adjacent Stocks Soared Much Higher
The Bitcoin price is leaping 10% higher today. What’s going on?
Bitcoin Price Prediction: BTC Could Reach $70,000 by the End of 2023, Says Analyst
Crypto Price Today: Bitcoin breaks $47,000 barrier, up 10% in a week
Bitcoin-ETFs and the Evolution of Cryptocurrency Markets
Bitcoin price: When buying BTC would've made you rich, and when it became a terrible idea. – Slate
