What is the reason behind the current decrease in Bitcoin price? Is there a possibility for the BTC price to fall below $60K before the weekend?
Bitcoin Price Drops 6%, Analyst Warns of Downward Pressure
Bitcoin’s price experienced a significant drop, reaching $63,400, the lowest it has been since hitting its all-time high. Renowned crypto analyst Michaël van de Poppe has raised concerns about the bearish divergence of Bitcoin, suggesting a potential downward trend for the cryptocurrency. The 6% drop on Tuesday marked the largest one-day decline in two weeks, fueled by a surge in cryptocurrencies. Van de Poppe identified several key factors contributing to Bitcoin’s downward trend.
One of these factors is the upcoming Federal Open Market Committee (FOMC) meeting scheduled for March 20, 2024. Van de Poppe emphasized the impact this meeting will have on the crypto market. In the previous FOMC meeting on January 30-31, 2024, the Federal Reserve opted to maintain interest rates at 5.25%-5.50%. This decision indicates that the Fed is taking a break from the rate hike implemented in March 2022 to address inflation. Furthermore, the Fed has expressed a willingness to keep rates unchanged until inflation shows signs of falling below the 2% target. As a result, many analysts and investors anticipate that the central bank will continue to hold rates steady in the upcoming meeting.
Another factor influencing Bitcoin’s drop is the Bank of Japan (BOJ) ending its era of negative interest rates. After eight years, Japan’s central bank has decided to stop implementing negative interest rates to stimulate lending and demand. In its first interest rate hike in 17 years, the BOJ raised the short-term policy rate from -0.1% to a range of zero to 0.1%. However, analysts caution that the BOJ may approach further rate hikes cautiously due to a weak economic recovery.
Additionally, Grayscale’s continued selling of Bitcoin has also contributed to the decline. After converting its fund to a Bitcoin ETF on January 10, following the approval of a spot Bitcoin ETF by the SEC, Grayscale began moving its BTC to Coinbase for selling. Previously, Grayscale’s bitcoin fund was a closed-end fund, requiring investors to hold shares for at least six months. However, with the existence of ETFs, investors can easily liquidate their holdings and take profits, which is likely what they are doing.
Despite the downward trend of Bitcoin, van de Poppe believes that this could be an opportunity for altcoins. As Bitcoin’s dominance decreases, altcoins may become more appealing to investors who seek diversification and growth in the crypto market.
Van de Poppe’s analysis provides valuable insights for investors looking to navigate the world of crypto trading.