Bitcoin, ethereum and other major cryptocurrencies have fallen sharply, plunging the bitcoin price back under the closely-watched $40,000 per bitcoin level.
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The bitcoin price has bounced around $40,000 for most of 2022 as the bulls and the bears battle it out for control of the market. Meanwhile, the ethereum price has dropped under $3,000 per ether for the first time since mid-March.
The combined crypto market has lost almost $400 billion since early April, as top ten cryptocurrencies including Binance’s BNB, Ripple’s XRP, solana, cardano, luna and avalanche struggle—with analysts warning a “disaster in the financial markets” could push bitcoin under $30,000.
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“The signal for a break of the mild upward trend would be a consolidation below the $38,000 per bitcoin levels,” Alex Kuptsikevich, FxPro senior market analyst, wrote in emailed comments. “If the bulls capitulate, the first cryptocurrency could be pushed into the $32,o00 to $35,000 range without much resistance.”
The bitcoin and crypto sell-off comes as U.S. stock market futures declined ahead of the Monday’s opening after a long holiday weekend, with investors bracing for a week of major first-quarter earnings reports and speeches by Federal Reserve policy-makers.
Last week, March’s consumer price index reading showed an 8.5% increase from a year ago, the fastest annual gain since December 1981. Fed officials have promised to do whatever it takes to bring inflation under control, however, Goldman Sachs analysts have warned the Fed will struggle to cool inflation without causing a U.S. recession, putting the odds of the economy contracting at around 35% over the next two years.
“We are increasingly concerned about a summer of turbulence and volatility,” Eric Robertsen, chief strategist at Standard Chartered, wrote in a note first reported by Bloomberg. Art Hogan, chief market strategist at National Securities, puts the chance of a recession this year at 35%, “but it’s not our base case,” it was reported by Reuters. “As concerns over an impending recession recede, I think the sponsorship of the defensives will recede with that,” Hogan told the newswire.
“A consolidation scenario below $30,000 would require an absolute disaster in the financial markets,” added Kuptsikevich.
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Last week, Arthur Hayes, the co-founder of crypto exchange BitMEX, revealed he fears the price of bitcoin and ethereum could fall much further in coming months. Hayes expects the bitcoin price to crash to $30,000 over the next two months, with the ethereum price falling as low as $2,500 per ether.
“Bitcoin and ethereum will bottom well before the Fed acts and U-turns its policy from tight to loose,” he wrote in a blog post, adding he’s betting on a bitcoin and ethereum price “crash” by June.