Bitcoin, the cryptocurrency par excellence, has recently been the victim of extreme market volatility. Despite the bullish start to the market, Bitcoin appears to be collapsing after briefly touching the $70,000 mark.
While some believe pre-BTC halving jitters are eating away at BTC price levels, the current economic situation, coupled with growing geopolitical tensions, is also heavily responsible for Bitcoin falling to new lows.
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Three reasons why Bitcoin is falling
Geopolitical storm (Israel-Iran war)
Growing geopolitical tensions between Israel and Iran are a major contributor to Bitcoin’s fall. Despite the bullish market stance, where investors are eager to adopt Bitcoin through ETFs and active trading, the Bitcoin price has not yet reached a stable threshold. The token craves a resurgence, but is continually challenged due to rising geopolitical tensions, which are making investor sentiment bitter and skeptical.
With the influx of new updates regarding the worsening war conditions in the region, Bitcoin is being massively abandoned by investors to protect their interests and profits in the wake of escalating war tensions.
The Federal Reserve’s position on inflation
The US economy is currently plagued by inflation fears, keeping investor sentiment cautious and dry. At a new meeting held yesterday, Fed Chairman Jerome Powell announced new plans for the US economy. Powell said the FED would not cut rates at this time, triggering a wave of market chaos.
With the spiraling debt indicators that the US economy is being dragged into, the FED’s current stance could accelerate excessive lending and borrowing. which could inflate US debt indicators to dangerous levels. This could trigger a bond market collapse, followed by an asset market crash, triggering a complete economic collapse.
The development spurred speculation that asset market dynamics would turn bearish, forcing investors into a panicked stance. This has further intensified the Bitcoin dumping frenzy, adding even more pressure on Bitcoin’s current price threshold.
FOMO and erratic investor behavior
With Bitcoin ETFs in the mix, investor sentiment towards Bitcoin has become greedy. In a business analogy, greed refers to purchasing an asset in the hopes of achieving rapid, prolonged profits.
A nuanced trader who knows the basics of trading would initially hold the asset for a set amount of time before selling it back into the market. However, amid rising war tensions and FOMO fueling the market, investors are quickly selling assets. This may also contribute to the frequent price fluctuations that Bitcoin is currently experiencing. This may also force the token to experience sharp price declines. Retailer greed can also manifest through excessive trading, sentimental trading, and panic selling, which can indirectly drive BTC price degradation.
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reference: watcher.guru