Bitcoin costs have been plummeting lately and are now falling to their lowest level in more than two months.
The world’s highest-valued virtual currency through overall market capitalization earlier fell to $56,671. 84, according to data from CoinMarketCap.
At this point, the cryptocurrency’s value is trading at its lowest point since around Feb. 26, more figures from CoinMarketCap reveal.
After falling to this level, the virtual asset recovered slightly, emerging at $59,368. 50 this afternoon.
However, at the time of writing, Bitcoin had given up the maximum of those gains, fluctuating very close to $57,000.
When asked about the most recent losses, analysts pointed to a handful of variables.
Earlier today, a CoinDesk article spoke of a widespread “risk-off sentiment” in global asset markets, saying that this mentality had taken hold due to expectations that Federal Reserve officials would cut benchmark rates after their latest policy meeting.
The central bank announced at 2 p. m. that members of the Federal Open Market Committee had voted against cutting benchmark rates, which are lately at their most popular in more than 20 years.
Tim Enneking, Managing Partner at Psalion, commented on this situation. When asked what drove Bitcoin’s new crash, he provided the following response email.
“One of the reasons is obviously the correlation with fiat assets, which obviously have a risk-off attitude due to comments from the U. S. Federal Reserve that it is expected to cut interest rates until much later this year, if at all. “
Brett Sifling, Investment Advisor, Gerber Kawasaki Wealth
“The general pullback in the macro market is one of the main reasons why Bitcoin has also fallen,” he said.
“I agree that market participants have a risk-off sentiment ahead of the Fed’s interest meeting,” Sifling said earlier in the day.
“However, today’s meeting will most likely not be an event, especially as they continue to push back the interest rate cut timeline to later this year. “
Another variable cited as potentially contributing to Bitcoin’s recent crash is how the virtual currency tends to behave after its network has noticed the so-called halving, where the incentive to mine is reduced by 50%.
Enneking talked about it. In the past, he noted that cryptocurrency’s correlation with broader global asset markets, and how these have recently been affected by risk-off sentiment, has been one of the reasons why Bitcoin has fallen recently.
However, he added: “Another, however, is simply BTC’s typical movement after each of the last 3 halvings: the next two quarters are weak, and then the real bull market starts the year after the halving. “
“Although BTC spot ETFs have somewhat distorted this trend this time around, the underlying thesis is still valid,” Enneking explained.
However, Sifling is skeptical of this generalization.
“With a very small halving pattern, it’s hard to say,” he said.
“I recently found this knowledge in a CNBC article,” Sifling said, which can be viewed here. The article cites knowledge from Coin Metrics.
“It turns out that the halving of 2016 may have coincided with the trend described, however, the halving of May 2020 generated a 13% pullback after the first month,” he noted.
“I agree that Bitcoin’s profit peak appears to occur at least 3 months after the halving event. “
Disclosure: I Bitcoin, Bitcoin Cash, Litecoin, Ether, EOS and Sol.