As the downward trend witnessed in Bitcoin and other cryptocurrencies continue, the market value of cryptocurrencies is being severely tested.
At the time this story was published, the website that tracks Bitcoin values recorded a drop below $23,000. This represents a loss of roughly 4% of its value over the preceding twenty-four hours.
This was probably caused by the freshly announced macroeconomic data, which indicates that the economy is beginning to slow down. This would make sense.
Recent data (ending on February 23) shows a slowing in the quarterly growth of the economy from 3.2% to 2.7%.
There will then be an impending real estate market crisis, which will put psychological stress on investors and lead to lower returns.
The fact that major stock market indexes like the S&P 500 and the Dow Jones both saw falls of a few percentage points. It indicates that investors are not optimistic about the present status of the economy in the United States.
Because of the close relationship that exists between stocks and cryptocurrencies, Bitcoin and the market might potentially suffer in the long run.
New difficulties for the investors to face
The price of Bitcoin, which is at $22,981 at the moment, has a negative impact on the market for other cryptocurrencies. The lower price action of the king cryptocurrency has forced the altcoin market down with it.
DeFi announces that space assets have dropped 2% from $49 B to $48 B over the past day. As a direct result of the recent sharp decline in price, there have been major implications as a result.
According to CoinGlass, there appears to be a significantly higher amount of short sales than long purchases. This is backed by the fact that on February 25 a total of $143 million was liquidated from long holdings.
The fact that long holdings were liquidated lends greater credence to the findings of CoinGlass. Over the last week, other major cryptocurrencies like Ethereum also saw their prices drop, coming dangerously close to matching Bitcoin’s.
As a direct result of this, the values of several other prominent alternative cryptocurrencies experienced a precipitous decline.
The cost of Litecoin experienced an increase of 8% over the course of the last week as it continued its upward trend. Litecoin is a form of virtual money that is well-known for its widespread adoption among financial market participants.
Bitcoin bulls are deliberating after stabilizing below $23,000
Investors do not have a lot of breathing room at the moment due to the price of the currency. Due to the fact that the coin has been unable to break over the $25,000 level of resistance.
Which has led to an increase in pessimistic sentiment in the short to medium term. Yet the bulls could try to find support over $22, which is a crucial springboard for an upward surge in the days ahead.
Traders and investors should concentrate on their efforts for the time being mostly on the $22,000 trading range for the currency.
If this pattern is disrupted, it might lead to more sales and a drop in Bitcoin’s price below $21,000. The status of the economy as a whole will also have a significant bearing on the likelihood of a long-term downturn.
Supporters of bitcoin should also maintain a close check on significant stock indexes such as the S&P 500. Even though the movement of the price of bitcoin is a reflection of the movement of the equities market.
Investors could also follow the opinions of other traders by counting the long and short rankings of different currencies. Investors can utilize this information to assist them in making more well-informed decisions.
In light of the fact that the price of bitcoin keeps following the same trend of persistent decline. Investors should prepare themselves for the possibility of repercussions in the days and hours ahead.