Bitcoin at a one-month low risks widening the correction. Here are the reasons behind the collapse of the last few sessions and the supports capable of slowing down sales.
Bitcoin retreating with target price at -17%, at $50,000. Far from $1 million as expected just a few weeks ago. After a period of strong speculation and exponential growth, the world’s first cryptocurrency is now in a significant correction phase. In recent months, Bitcoin has dominated financial markets, fueled by enthusiasm for Bitcoin ETFs and optimistic forecasts from industry analysts. After a rapid increase in prices - which has seen Bitcoin grow by 300% since the end of 2022 - now, however, the panorama has suddenly reversed.
Is this a temporary fix or is it the start of a new crypto-winter?
In the article, we will analyze the reasons behind the sharp retreat of Bitcoin. We will examine the implications of this correction for investors, offering perspective on how the cryptocurrency landscape may evolve.
3 reasons why Bitcoin is falling
Bitcoin’s recent decline can be attributed to three major factors that have put heavy pressure on the market.
1. Sales of Bitcoin Confiscated by German Police: German police sold approximately $325 million in confiscated Bitcoin, creating concerns about available reserves and amplifying bearish sentiment among investors. This move increased the supply of Bitcoin on the market, contributing to the price decline.
Data from Glassnode indicates that the recent Bitcoin sell-off has been driven primarily by short-term holders (STHs), those who have owned Bitcoin for less than 155 days. These investors accounted for nearly all of the realized losses, totaling $537 million. In contrast, long-term holders (LTH), who have owned Bitcoin for over 155 days, suffered much smaller losses of just $543,000.
Furthermore, the data shows that approximately $325 million of the losses are attributable to “whales,” or entities holding between 100 and 10,000 BTC. This highlights that large-scale investors are also vulnerable to market pressure and may sell similarly to retail investors.
2. Regulatory investigations in the United States: the Commodity Futures Trading Commission (CFTC) investigation into Jump Trading, a major market maker in cryptocurrency trading already involved in the FTX and TerraUSD scandals, added further pressure on the market. Regulatory concerns increase uncertainty and push investors to reconsider their positions in Bitcoin, fueling greater risk aversion.
3. Interest Rate Expectations and Inflation: The overall risk-off atmosphere was also fueled by inflation expectations in the United States. The data from the PCE price index, directly influencing the policies of the Federal Reserve, has caused many investors to retreat from cryptocurrencies in favor of more traditional assets such as the US dollar. This change in attitude was highlighted by data from CoinShares, which shows outflows totaling $630 million from Bitcoin exchange-traded funds. This reversal from previous inflows indicates growing caution among investors regarding the volatility of the cryptocurrency market.
Bitcoin Future Outlook
According to analyst Willy Woo, Bitcoin could face further corrections before stabilizing. Despite a modest rebound above $60,000, Woo warns that without a significant reduction in futures positions, Bitcoin could see new lows. A critical level to monitor is the $54,000 level, which could mark a significant liquidation point if exceeded. This scenario could outline a further change in sentiments, leading Bitcoin into a more pronounced bearish phase.
In contrast, global investment firm Bernstein has a much more optimistic view. A recent report from Bernstein predicts that the world’s leading digital asset could reach $200,000 by 2025, $500,000 by 2029 and, incredibly, $1 million per token by 2033. This decade-long rally, according to Bernstein analyst Gautam Chhugani, will be largely driven by institutional investors, supported by the approval of Bitcoin ETFs by major financial firms and private banking platforms.
These bold predictions were one of the central themes of a cryptocurrency meeting held at Galaxy Digital headquarters in New York. Mike Novogratz, the billionaire founder and CEO of Galaxy, hosted a select group of broker-dealers, crypto exchanges, energy providers, and other industry players. Participants were unanimous in their belief that Bitcoin is increasingly poised for greater mainstream adoption. Big names like Larry Fink, CEO of BlackRock, and even former President Donald Trump, have expressed their support for Bitcoin, with Fink running the world’s largest asset management firm and Trump who accepts donations in Bitcoin for his election campaign.
However, Bitcoin’s path to $1 million depends on two key conditions: clearer regulations and lower interest rates. Clear regulations would offer greater confidence to both large institutions and individual investors, while lower interest rates would make Bitcoin more attractive compared to risk-free assets such as cash and bonds.
In conclusion, Bitcoin, after a period of strong growth and optimism, is facing a significant correction phase. Regulatory pressures, government sell-offs, and macroeconomic uncertainties have jointly affected the cryptocurrency market, pushing Bitcoin below key support levels. As investors closely monitor inflation data and Federal Reserve decisions, Bitcoin’s future remains uncertain. It remains to be seen whether Bitcoin will be able to regain its bullish momentum or whether it will face further challenges in the near term.
DISCLAIMER
The information and considerations in this article should not be used as the sole or primary basis for making investment decisions. The reader maintains full freedom in his own investment choices and full responsibility in making them, since only he knows his risk appetite and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to public savings.|
Original article published on Money.it Italy 2024-06-25 16:50:00. Original title: Bitcoin in ritirata, nuovo target price a -17%. Altro che $1 milione...
