Bitcoin and cryptocurrency prices have dropped further after a sudden sell-off earlier this week.
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The bitcoin price fell as low as $56,500 per bitcoin on some exchanges, down almost 5% on the last 24 hours and taking bitcoin’s losses on this time last week to a decline of 11%. Bitcoin volatility has weighed on the price of ethereum, Binance’s BNB, solana, cardano and Ripple’s XRP—all down between 4% and 8% over the last 24 hours—and wiping around $500 billion from the combined crypto market capitalization in just over seven days.
As bitcoin, ethereum, Binance’s BNB, solana, cardano and Ripple’s XRP all struggle, traders are desperately searching for signs of a floor with one crypto exchange chief exec naming bitcoin’s $1 trillion market capitalization as a possible support level.
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“The price action on bitcoin continues to look weak,” Pankaj Balani, the chief executive at Singapore-based crypto derivatives exchange Delta, said in emailed comments. “We can expect more volatility in the coming sessions but bitcoin’s $1 trillion market cap should hold as a good support in the short term.”
Bitcoin broke back above the $1 trillion mark in early October after a summer slump, with the bitcoin price rally propelling the wider market to an all-time high combined value of around $3 trillion. Earlier this month, the bitcoin price rally took bitcoin’s market cap to highs of $1.3 trillion. This week it’s fallen back to just under $1.1 trillion.
The recent volatility comes as inflation fears spread to central bankers who are now expected to accelerate plans to lift interest rates. Earlier today, analysts at Wall Street giant JPMorgan brought forward their prediction of a Federal Reserve rate high to September next year, it was reported by Bloomberg.
“[The latest bitcoin and crypto sell-off] is coming at a time when the macro backdrop has also started to deteriorate given the rising inflation,” added Balani. “It won’t be surprising to see central banks taper off some liquidity from the markets in order to cool down the inflation. This should put downward pressure on all risky assets including bitcoin.”
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Despite the likes of bitcoin, ethereum, Binance’s BNB, solana, cardano and Ripple’s XRP losing billions over the last week, many crypto market watchers remain upbeat.
“The current market correction is attributed to a range of factors, such as the recently strengthening U.S. dollar index and the recent U.S. infrastructure bill that seeks to introduce greater regulation of crypto,” Freddie Evans, sales trader at the U.K.-based digital asset broker GlobalBlock, wrote in a note.
“However, there remain multiple technical indicators that suggest this is not the end of the current bull market and so this continued correction might not last long.”