This past weekend witnessed the much-predicted downturn in the cryptocurrency market, as geopolitical tensions escalated with rising whispers of an attack on Iran. Bitcoin saw a steep fall from its anticipated $78,000 target, failing to maintain a hold above $80,000. Altcoins mirrored this downturn, experiencing declines over 10%. While Bitcoin managed a slight rebound from its low point, investors are left questioning if this marks the end of the downtrend or just a pause.
What Led to Bitcoin’s Downward Spiral?
The slide in Bitcoin’s value was in part attributed to President Donald Trump’s decision to appoint Kevin Warsh as the new head of the Federal Reserve. Warsh, known for his cautious approach to monetary expansion, could potentially stall quantitative easing even as interest rates might be cut. This choice created a wave of apprehension in the crypto sector following the announcement late last Friday.
Adding fuel to the fire were higher-than-expected Producer Price Index (PPI) figures and looming threats of aggression towards Iran. If the newly chosen Fed chair swiftly implements rate reductions, it could raise doubts about the institution’s autonomy. The instability reminiscent of the tenures of Powell and Cook is still fresh in memory.
Within the past 24 hours, the market saw liquidations surpassing $2.58 billion. Alongside a 10% drop in open positions, there was a sharp 50% increase in total trade volume, indicating a general exit from the market.
Is a Sunday Crypto Rally Possible?
In the aftermath of significant sell-offs, a fleeting recovery phase is typically observed within crypto markets. Even if the downtrend persists, a temporary climb followed by renewed selling pressure is often seen. For this Sunday, the price action moving toward CME closure reflects this possibility.
Consequently, a fresh rally attempt could push the BTC price to hover between $83,000 and $84,000. If the price finds support at $80,600, it might gain strength by Monday, potentially rising to the $85,000-$88,000 range, aiming for a more elevated peak. The current most probable scenario appears to be a recovery aligned with the CME market’s closure.
Does this signal a shift in trend? Bitcoin is currently entrenched in a downtrend, with bearish sentiments setting sights on the $56,000 threshold.
Key takeaway points from the weekend include:
- The cryptocurrency market experienced a weekend crash.
- Bitcoin slid below its intended target of $78,000, temporarily stalling further declines.
- Liquidations exceeded $2.58 billion within a day, displaying an evident exit trend.
- Anticipations look towards a possible recovery aligning with CME closing patterns.
As traders brace for the week ahead, the crypto market’s trajectory remains unpredictable. Cautious optimism seems to persist, with close attention paid to both geopolitical developments and decisions from the Federal Reserve shaping the future market landscape.
