The Bitcoin price sell-off accelerated during the weekend as concerns over regulation and high interest rates remained. The BTC dropped to a multi-week low of $30,289, bringing its total market capitalization to below $700 billion. Other cryptocurrencies like Ethereum, Ripple, and Dogecoin also declined sharply.
What happened: There are three primary reasons why the BTC price has declined sharply lately. First, there are concerns that the Federal Reserve will start a tightening phase as the US economy rebounds. This is evidenced by the tightening labour market and the fact that inflation has risen.
Later this week, the US will publish the personal consumption expenditure (PCE), which is a closely-watched inflation metric. Analysts expect the data will show that the PCE rose to the highest level since 2008.
Second, Bitcoin price has dropped because of regulatory concerns after China announced plans to crack down on finance companies facilitating the transactions. Furthermore, Bitcoin goes against the liking of Chinese authorities who prefer surveillance.
Third, a panic emerged as the sell-off accelerated. This is in line with the Wyckoff model that explains the stages of an asset’s rally. These are hope, optimism, thrill, euphoria, mixed feelings, complacency, and panic.
The daily chart shows that the BTC price has been under intense pressure recently. This happened after it formed a flat top pattern above $60,000. The pair has moved below the 50-day, 100-day, and 20-day exponential moving averages (EMA). This is notable since the 50-day and 100-day EMAs are attempting to have a crossover, which will validate the bearish thesis. The pair is also hovering slightly above the 50% Fibonacci retracement level.
Therefore, another move below the 50% retracement will open the possibility that the price will fall to $25,000. On the flip side, above move above $40,000 will send a signal that there are still more buyers remaining in the market and invalidate the bearish thesis.
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