It’s a sea of red in the cryptocurrency space as the market capitalization of the entire space slips below the $1.8 trillion support zone. Bitcoin falls to the $38,000 trading zone, with the risk of more downside, despite news of Elon Musk’s acquisition of social media platform, Twitter.
United States Tech-related stocks were some of the hardest-hit assets in the last trading session and this pullback was followed by sharp declines in crypto prices as risk assets become ever riskier due to the hawkish stance of the U.S. Federal Reserve whose mandate is to keep the ever-rising inflation rate in check.
On the news of Musk’s acquisition, Bitcoin traded as high as $40,500, in what looked to be a rally in the space, however, the bears had other plans as Bitcoin declined by 6.05% to currently trade $38,050, as of the time of this writing.
What you should know
- The price action looks to be a continuation of the weakness seen across U.S. financial markets this month. Month-to-Date (MtD), the S&P 500 is down by 7%, the Nasdaq has declined 11% and the Dow is bearish by 3%.
- MtD, due to Bitcoin’s correlation to U.S. financial markets, it has followed the trend of U.S. markets, as it is also down MtD by 16.44%, based on current market prices.
- The bearish trend in FAANG (an acronym used to describe some of the most prominent companies in the tech sector) stocks has essentially been a weight that has dragged down the wider market and the recent 35% decline in the price of Netflix last week, highlighted a major kink in the “strong markets” narrative.
- The decline seen yesterday in the price of Bitcoin and other altcoins, has led many analysts to reiterate that we are headed for a bear market bottom, but not everyone has such a dire outlook, including crypto analyst and pseudonymous Twitter user Rekt Capital, who opined that this was not the case.
- Rekt Capital said, “BTC is right back at the long-standing macro Higher Low support.” According to the user, BTC continues to trade within the range it has been stuck in since the beginning of the year and there is still a strong amount of support in the lower $30,000 range.
- Further insight into the weakness across global markets can be found by looking at the strong performance of the dollar index (DXY), which is a measure of the strength of the U.S. Dollar. The DXY is currently at its highest price in two years, according to data from trading view.
The fate of the market will likely hinge on how the dollar performs moving forward amid rising inflation, ongoing supply chain disruptions and the global conflict in Europe.
Although the crypto market capitalization is down by 5%, we are still seeing some bullish price actions in the ZRX token, the native token of 0x Labs, which just raised $70 million in a funding round led by Greylock, with participation from Pantera, OpenSea and Jump Capital. It is the only cryptocurrency to post gains in the last 24 hours, in the top 100, according to data from CoinMarketCap.
