Bitcoin's price is falling in the aftermath of record highs and the “halving” event. The cryptocurrency's value has already dropped 17 percent in the last month and 12 percent in the last week.
Bitcoin's Market Volatility Continues Despite Recent Halving Event
Bitcoin (BTC) traded around $57,700 in the European morning on Wednesday, dropping to its lowest point since the end of February as the most traded cryptocurrency experienced its most difficult month since November 2022.
BTC has plummeted roughly 6.3% in the last 24 hours, falling below the $60,000 support level late Tuesday, according to CoinDesk data. The broader crypto market, defined by the CoinDesk 20 Index (CD20), fell over 9% before recovering some of its losses.
Despite its recent poor performance, bitcoin remains much above where it was before the present run began. Following a rather steady 2023, the price began to significantly increase in February.
By March, bitcoin had reached a record high of roughly $72,000. On Wednesday, it stood at about $57,000, down considerably from that peak but still far above its February levels.
The present instability comes despite heightened interest in bitcoin following its halving earlier this month. That technical event, which indicates that mining the cryptocurrency will become more difficult, occurs approximately every four years and has the potential to increase interest and volatility in the cryptocurrency.
That event occurred on April 20. Then, bitcoin was trading about $64,000, and it has slowly declined since then.
Cryptocurrency Market Faces Selling Pressure Amid Broader Financial Uncertainty
Cryptocurrencies have been hampered by risk-off sentiment in the broader financial markets, as well as a stagflationary feel in the United States, following indicators of weaker growth and persistent inflation, which have dampened chances for a Federal Reserve interest rate decrease. The Federal Open Market Committee is scheduled to make its latest rate decision later today.
Ether (ETH) fell approximately 5%, sliding below $3,000, while dogecoin (DOGE) led other big altcoins down with a 9% decrease. Solana (SOL) and avalanche (AVAX) both dropped nearly 6%.
Bitcoin plummeted in April, marking the first monthly drop since August. The 16% plunge was the worst since November 2022, when crypto exchange FTX failed, but some analysts predict greater declines in the near future.
According to digital asset analysis firm 10x analysis, selling pressure is building towards the $52,000 level due to outflows from US spot exchange-traded funds, which have reached $540 million since Bitcoin's halving on April 20. It predicts that the average entry price for American bitcoin ETF holders is $57,300, which might serve as a significant support level.
As indicated by 10x CEO Markus Thielen, the closer the current price of bitcoin gets to this average entry price, the more likely it is that more ETFs will unwind.
“There might have been a lot of 'TradeFi' tourists in crypto – pushing longs until the halving – this time is now over,” he wrote. “We expect more unwinding as the average Bitcoin ETF buyer will be underwater when Bitcoin trades below $57,300. This will likely lower prices to our target levels and cause a -25% to -29% correction from the $73,000 top – hence our price target of $52,000/$55,000 during the last three weeks.”