Bitcoin falls when the dollar rises; COVID-19 Suffers the Most
As the value of the dollar surged and China continued to crack down on crypto mining activities, bitcoin slid roughly 7% Monday, dipping below $33,000 for the first time since June 8.
After temporarily rising above $40,000, Bitcoin fell roughly 9% last week.
Following the Federal Reserve’s announcement last week that it may raise interest rates sooner than expected due to concerns about growing inflation, gold prices fell and the dollar climbed.
“[Federal Reserve Chairman] Jerome Powell’s recent statements drove the US dollar higher, prompting a dramatic slump in the markets,” according to Jason Deane, an analyst with Quantum Economics in London. “In general, because the strength of the dollar and the price of Bitcoin are inversely associated, this increased selling pressure on the flagship cryptocurrency.”
As many U.S. investors changed their portfolios to new conditions, the stock market lost approximately 3.5 percent.
The sustained decline may portend a long-term bear market for Bitcoin, or at the very least, trading inside a restricted range.
It’s also likely to widen the divide between retail and institutional investors, resulting in fewer hands controlling a larger portion of Bitcoin. During the slump, retail investors sold, while large investors took a long-term perspective of Bitcoin’s worth and boosted their holdings.
MicroStrategy, a prominent Bitcoin investor that is often credited with helping to push the price to new highs, has announced a $500 million debt offering, with the proceeds going toward buying more Bitcoin.
According to Deane, technical analysis of Bitcoin’s price points to the “death cross,” which occurs when an asset’s short-term moving average goes below its long-term moving average, as a crucial indicator of a potential sell-off and the start of a bear market.
“Like many things in the markets, talking about technical-driven occurrences like this might cause them to happen, even if the asset’s fundamentals surpass that purely technical indicator,” he explained.
Despite the fact that it is no longer breaking news, China’s continuous crackdown on Bitcoin mining operations has alarmed individual investors and led to the cryptocurrency’s price decline.
China is home to up to 65 percent of the world’s Bitcoin mining operations.
Miners attempt to solve complex hexadecimal puzzles to refresh the blockchain, the unbreakable record of transactions, and successful efforts. This is a brief summary.