• Bitcoin price has lost its crucial $23K resistance level, dropping 1.2% in the last 24hrs.
• Major macro events could be the reason for the crypto market downturn with Ethereum dropping 4.57%.
• Investors could be less optimistic as Bitcoin and other large cap cryptocurrencies are highly correlated with tech stocks.
Bitcoin price has been on a roller coaster ride this January, starting off the year with a large spike in value and now taking a sharp U-turn downwards. The flagship cryptocurrency is currently selling at $22,656 after losing 1.2% in the last 24hrs, while lead altcoin Ethereum has lost 4.57% and is trading at $1,553. This recent downward shift has caused many investors to question what could be the cause behind this market downturn.
The first major factor contributing to this market downswing is the high correlation between Bitcoin and other large cap cryptocurrencies and tech stocks. As tech stocks have plummeted in value due to macro events such as the US-China trade war and the pandemic, this has had a ripple effect on the crypto market, causing Bitcoin and other cryptocurrencies to lose the crucial $23K resistance level. This is further compounded by the fact that investors have become less optimistic as they observe the downward trend of the market.
Furthermore, geopolitical tensions such as the Biden administration’s announcement that they are planning to impose tariffs on China are also having an adverse effect on the crypto market. This could be due to the fact that it is a major disruptor to global economic stability, which could lead to further market instability. Moreover, the increasing uncertainty surrounding the US Dollar and its future value is also causing investors to become less confident in the crypto market, leading to the overall downward trend.
Overall, it appears that a combination of macro events and investor sentiment is the major contributing factor to the recent market downturn. It is important for investors to remain alert and pay close attention to any new developments that could affect the crypto market in the future. Although it may appear that the market is headed for a downward spiral, it is important to remember that the market is subject to change and that there is still potential for growth.