Flagship digital asset bitcoin has seen a sharp decline in the last few days. It is currently trading at its lowest levels in August after a few weeks of a sustained upsurge. According to data from Coinmarketcap at press time, bitcoin is trading at $19,879 and has lost 7.34% of its market value in the last seven days.
The main catalyst for the current price dive is last Friday’s announcement by the chairman of the US Federal Reserve, Jerome Powell. He stated that the United States Central Bank will remain hawkish for a while, which goes against previous expectations of financial markets that expected a soft landing only a few weeks ago.
Being hawkish means that the Central Bank is in support of raising its interest rates to fight inflation even to the possible detriment of economic growth and employment. Bitcoin has shown previous tendencies of nosediving following similar updates. Almost every other crypto asset has always taken a hit too.
Also, there has been a lack of institutional investors in the market in the past weeks. According to data from TradingView, the crypto market saw outflows rather than inflows in the last two weeks. In view of that, the market will not see an upward price trend until institutional investors feel it is time to get back into the crypto market.
Another factor influencing the pricing is that there has been no exciting news or updates around bitcoin recently. The Ethereum Merge update, which has even lost steam recently, is the only thing that might bring fresh capital to the market while there is a complete absence of any Bitcoin-related news, updates and events.
Read also: Merge will improve Ethereum’s transaction speed by 769,000%. Here is how
What the experts are saying
As bitcoin dips further, analysts within the space have propagated their opinions on the market’s direction. Among them is a prominent market watcher that has predicted extreme bearish movements for the asset in the coming days.
Renowned crypto analyst and accomplished swing trader, iI Capo of Crypto has forecast a further dip. According to the analyst, his main target for BTC is $16k. He considers that price range is “very likely for the coming weeks.”
Recall that the last time Bitcoin saw the $16k mark was in December 2020. Since conquering that price mark in the heat of the pandemic, the asset has not returned to that prize zone. The closest Bitcoin got to retouching the $16k price was in mid-June 2022 when the current Crypto Winter was at its harshest. It dipped to $17,708 on June 18 for the first time in 2 years.
Furthermore, iI Capo of Crypto sees key resistance levels at $22,500 and $23,500. Resistance levels mean a price mark assets can surge to before declining within a timeframe. He advised investors to take those levels as a good sell opportunity and said it would be a bearish confirmation for further dips should Bitcoin hit the $19k mark.
What should you do?
Although the crypto market is betting on the promise of future recovery, there remains a possibility that the correction might not be happening anytime soon owing to prevailing macroeconomic conditions.
Chief among these is the United States central bank’s announcement that it will continue to hike interest rates.
Also, Bitcoin and the general crypto market still haven’t fully recovered from the aftermath of high-profile incidents like the Terra crash and the Celsius bankruptcy filing. Due to significant losses incurred, the crash has potentially dampened investor motivation.
Read also: Here is all you need to know about the Terra LUNA, UST crash
Although there is a great deal of uncertainty in the crypto space at the moment, we believe that the correction is normal and is part of the growth trajectory.
In light of this, it is better to “Hold On for your Dear Life (HODL) on your asset and anticipate a future rally. The times will change when the US Central Banks’ decision on the interest rates is altered.
Technext Newsletter
Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!
