Bitcoin, along with other digital currencies, continues down for the second consecutive week as risk assets are under sustained pressure in the wake of rising interest rates. Cryptocurrencies bloodbath also follows recent government crackdowns on private digital currencies, including the Russian Central Bank's outright ban on cryptocurrency mining and use.
Meanwhile, officials tighten their grip on this fledgling market, and investors await the upcoming Fed meeting due this week later. If you follow the digital currency market, you've probably noticed that the price of bitcoin, among other digital currencies, fell more than 50% from its all-time high of $69,000 in November. Bitcoin is now trading on the verge of its lowest level since July 2021.
Over the past five months, declining demand in the digital currency market has reduced the market cap from over $2.9 trillion to less than $1.7 trillion.
Central Banks Regulation Is Still The Biggest Driver Of The Crypto Market
In general, Bitcoin and the digital currency market have been downward since November last year. Meanwhile, the Federal Reserve's stance against inflation and austerity measures by central banks and governments in recent weeks have led crypto investors to be more cautious.
The Bank of England and the International Monetary Fund warned earlier this year about the correlation between stock markets and the crypto market. However, Federal Reserve officials do not seem to worry about this fast-growing market.
At the same time, the upcoming Federal Reserve minutes release and the interest rate decision meeting due to Wednesday are expected to have a substantial impact on the current downward trend. There is a struggling outlook for the labor market with the rising number of jobless claims last week.
Adding to odds, technology giants failed to meet earnings expectations while inflation continued to rise. Forecasting a threefold rate hike also put more pressure on equity markets caused indices to post the worst week since the pandemic.
Together, these factors put the Federal Reserve in a precarious position to save both the public economy and the markets at the same time. However, it seems unlikely that there is a way to preserve both.
Coinciding with rumors of increased secrecy by the Securities and Exchange Commission over the cryptocurrency market, the Russian central bank's proposal to ban the extraction and trading of cryptocurrencies in the country fueled severe selling pressure last week. These risks continue to drive the market lower.
Bitcoin Technical View
Based on the daily chart, Bitcoin has been downtrend since November 2021. The failure of buyers to maintain the $41,500 crucial support area led to a decisive break below the four-month low of $39,000, putting BTC on the back foot in the direction of lower support near $35,000.
The sustained move below this barrier would put the seven-month price floor of around $30,000 in the perspective of technical sellers. However, short-term momentum oscillators suggest that bears might take a breather around this level as RSI is sinking in the oversold region, below the 30-threshold.
Should the bears break through a price barrier of $30,000, the next support is expected to rise at $25,650.
On the other hand, buyers may consider the resistance at $ 44,300 if the fundamentals turn in Bitcoin's favor. If this stretch is broken decisively, it will signal the end of the downtrend in the short term.