The price of Bitcoin (BTC) has fallen by nearly 30% in the past seven days. The number one cryptocurrency by market capitalization has fallen below critical support as the macroeconomic conditions for risky assets worsened. The general trend across global markets appears to be to the downside.
Related reading | Bitcoin 3-Day Chart Indicates Frequency of March 2020 Crash
At the time of writing, Bitcoin is trading at $22,400 with a 4% loss on the lower time frames. Price action is on the downside of the pair with losses last seen in March 2020.
At that time, the crypto market and the traditional market collapsed due to the spread of COVID-19 and the lockdown measures imposed by the governments of the world to slow it down. A two-year halt in epidemic economic activity in some sectors has increased global liquidity.
The latter caused central banks around the world. In order to prevent the global economy from collapsing, these financial entities expanded the money supply.
Thus, there was more money to buy things. A portion of that money escaped into the cryptocurrency market, and what happened once in March 2020 became a rally in March 2021 when the price of Bitcoin soared above $40,000 on its way to an all-time high of $69,000.
As the price of BTC and other risky assets is trending upwards, and central banks printing more money, inflation has skyrocketed and reached a 40-year high on the US Dollar. The US Federal Reserve (FED) is trying to stop inflation, and riskier assets are paying the price.
According to trading desk QCP Capital, the current bearish price movement was caused by inflation exceeding market participants’ expectations and increasing fear that the Fed could turn more aggressive on its monetary policy.
as QCP claimedThe Fed has been hinting at a hawkish approach, What will happen to Bitcoin and global markets if they decide to hand it over? S&P 500 and Nasdaq are already trading at support:
There are talks of a 75 basis point hike at this Wednesday’s FOMC meeting. S&P and NASDAQ also broke below last month’s low.
Bitcoin affected by bearish news streak
In addition to the macro conditions, it appears that the cryptocurrency market has been hit by a series of bad news. The sector was barely recovering from the Terra (LUNA)-UST debacle when Binance, Coinbase, and other major companies emerged.
The most recent was Celsius, a US-based cryptocurrency lending company that stops all withdrawals from its users. The company appears to have fallen into bankruptcy as the price of Bitcoin and other top cryptocurrencies plunged below $24,000.
Related reading | Ethereum Drops Below $950 On Uniswap Overnight — Here’s Why
In this sense, QCP Capital believes that $20,000 will act as a decisive support for the price of BTC and $1,150 for Ethereum. If these levels fail, the cryptocurrency market could reverse its two-year gains and return to pre-COVID levels. This is already happening in traditional markets.