Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Is The Bitcoin Sell-off Just Starting?

By AMarkets CompanyCryptocurrencyJan 27, 2022 09:52AM ET
www.investing.com/analysis/is-the-bitcoin-selloff-just-starting-200616181
Is The Bitcoin Sell-off Just Starting?
By AMarkets Company   |  Jan 27, 2022 09:52AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

The cryptocurrency market came alive and is gradually moving into positive territory after an aggressive sell-off at the beginning of the week. On Monday, Bitcoin fell to its lowest level since July 2021. The price tested the $33,000 level but failed to decline any further, which allowed buyers to seize the initiative again and return the rate into the $38,000 area.

Despite the local recovery, the medium-term market sentiment remains bearish. The scale of a recent decline indicates that the uptrend that began at the beginning of last year has reached its limit. Experts say the market is likely to enter a correction with the downside target around the $30,000 support. We share a similar point of view and expect BTC to slip back into the red zone and test the specified level.

The general fundamental backdrop favors the bears. The possible reason for such a significant deterioration in market sentiment when bitcoin dropped $33,000 was Russia's central bank's proposal to ban the use and mining of cryptocurrencies on Russian territory as it threatens financial stability, citizens' well-being, and monetary policy sovereignty.

Chinese authorities offered the same arguments more than a year ago when they banned all financial institutions and payment companies from providing services related to cryptocurrency transactions. If this proposal is approved, BTC mining may suffer significantly since Russia accounts for 11.2% of the global "hash rate" and is the third-largest cryptocurrency mining country.

Another factor that contributed to the downward dynamics of the cryptocurrency sector was the US stock market collapse and rising Treasury yields amid growing investor anticipation that the Federal Reserve could soon start to hike interest rates.

Market participants fear that record inflation will force the US regulator to reduce its stimulus more rapidly. Last year, it was the main growth driver for risky assets. If these expectations are justified and the Fed keeps ramping up its hawkish rhetoric, it will lead to further strengthening of the US dollar, which means a decrease in interest towards alternative assets, including the cryptocurrency market.

According to forecasts, the Fed will decide on the first rate hike at its March meeting. By the end of 2022, the Fed may raise its key interest rate 3-4 times. Such a pace of monetary policy tightening may result in even more severe losses for the US stock market.

The US stock market is strongly correlated with the BTC dynamic, which means that a decline in stock indices is likely to cause similar moves in bitcoin.

Is The Bitcoin Sell-off Just Starting?
 

Related Articles

Crypto Briefing
Solana On The Verge Of Major Price Movement By Crypto Briefing - May 22, 2022

Solana has entered a consolidation period that could result in a major price movement.Key TakeawaysSolana is up by more than 40% from the $36.20 low hit on May 12. Still, the token...

Is The Bitcoin Sell-off Just Starting?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email