Bitcoin Falls Below $18,000 After Breaching The 2017 High
Bitcoin fell listed below a prior cycles all-time high for the very first time ever today, breaching the $19,776 level.The peer-to-peer currency had actually been having a hard time to preserve the $20,000 level over the previous week as liquidation and liquidity problems pestered the market as lending institutions such as Celsius Network fell under extreme pressure. Bitcoin has lost over 30% of its U.S. dollar value over the previous week, the greatest weekly loss because the start of the COVID pandemic in March 2020 when BTC saw its rate crash by 33.45% per TradingView information. Bitcoin traded below $18,000 at press time.Bitcoin broke the 2017 all-time high up on Saturday– the very first time it fell below a previous cycles high in its history. Image source: TradingView.As rates of interest rise in the U.S. at the fastest speed in decades, possessions viewed as riskier by institutions and professional investors– which consist of Bitcoin– have actually fallen dramatically causing a snow-ball effect throughout international markets.The Fed raised interest rates by 0.75% on Wednesday, the biggest walking by the American main bank system because 1994, as inflation has actually kept rising over the past year. The U.S. customer cost index (CPI) for the year ended on May 2022 came at 8.6%, greater than the month before (8.3%) and representing a new 40-year high.While rates of interest increase, the Feds balance sheet has started shrinking. The main bank announced last month that it would start a duration of quantitative tightening on June 1, minimizing its asset purchases and holdings– a spin on the policies it had actually embarked on years back.Notably, Bitcoin has actually so far existed in a duration of growth of the Feds balance sheet. Considering that 2008, at the beginning of the subprime crisis, the main bank began aggressively bloating its asset holdings. It stays to be seen what will occur with the P2P currency as the Fed tightens.Assets held by the Federal Reserve in its balance sheet since early 2000s. Image source: FRED.
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Other Questions People Ask
What caused Bitcoin to fall below $18,000 after breaching the 2017 high?
The recent drop in Bitcoin's value below $18,000 can be attributed to a combination of liquidation issues and liquidity problems in the market. As lending institutions like Celsius Network faced significant pressure, many investors were forced to sell off their holdings, leading to a sharp decline in prices. Additionally, rising interest rates in the U.S. have made riskier assets, including Bitcoin, less attractive to institutional and professional investors.
How does the Federal Reserve's interest rate hike impact Bitcoin's price?
The Federal Reserve's decision to raise interest rates by 0.75% has a direct impact on Bitcoin's price as it increases the cost of borrowing and reduces liquidity in the market. This environment tends to push investors away from riskier assets like Bitcoin, contributing to its recent decline below $18,000. As the Fed continues its quantitative tightening, it remains uncertain how Bitcoin will respond in the long term.
What historical significance does Bitcoin falling below $18,000 hold?
Bitcoin falling below $18,000 is historically significant as it marks the first time it has dipped below a previous cycle's all-time high of $19,776 set in 2017. This event highlights the volatility and unpredictability of the cryptocurrency market, especially during periods of economic uncertainty. Investors are closely monitoring this trend to assess potential future movements in Bitcoin's price.
What are the implications of Bitcoin's recent price drop for investors?
The implications of Bitcoin's recent drop below $18,000 for investors include increased caution and a reevaluation of risk tolerance. With over a 30% loss in value over the past week, many investors may consider adjusting their portfolios or exploring alternative investment strategies. Understanding the factors driving this decline, such as rising interest rates and market liquidity issues, is crucial for making informed decisions moving forward.
Will Bitcoin recover after falling below $18,000?
While it is difficult to predict with certainty whether Bitcoin will recover after falling below $18,000, historical trends suggest that cryptocurrencies can experience significant volatility. Factors such as changes in market sentiment, regulatory developments, and macroeconomic conditions will play a crucial role in determining its recovery trajectory. Investors should stay informed about these dynamics and consider their long-term investment strategies accordingly.