For about 10 days, the price of Bitcoin (BTC) has been limp, dropping as low as around US $27,000, depreciating about 10 percent from this year's peak.
Instead of maintaining its position above the US$30,000 level which is the main psychological and hopeful level , the price fell below it again and sank deeper and deeper.
Causes of Weak Bitcoin Prices
Decrypt reports that the slump in BTC prices has been followed by several major cryptocurrencies, except for stablecoins, by up to double-digit percentages.
The US dollar, which has strengthened thanks to the potential increase in the Fed's interest rate by 25 basis points (bp) at the next meeting in May, has succeeded in driving a sell-off in the crypto market.
When interest rates rise, yields ( yields ) on the US currency are higher, making non- yielding assets such as gold and cryptocurrencies less attractive to hold.
Previously, Bitcoin had a strong correlation with the technology stock market. However, currently Bitcoin has a strong correlation with the safe haven asset gold.
The correlation between the two seems to have gotten even stronger after the collapse of the SVB , which at that time sparked concerns about the failure of the banking sector. Another reason for the weak Bitcoin price is the debt ceiling crisis in the US.
Failure to add more debt could cause an economic crisis in Uncle Sam's country because the Government delays US bond interest payments.
The market's worries were evident as the value of default credit swap contracts to bet against the US dollar soared to 2008 levels .
Worries about the global economic crisis have created uncertainty among investors, so the price of BTC could rise if confidence in the US economy faltered.
In addition, Researcher at Kaiko Data Riyad Carey said that low liquidity conditions also contributed to moving the market with relatively small orders.
“Last week, two sell orders on April 20 for US$5.97 million have triggered a bearish breakout in Bitcoin price,” he said.
He also highlighted how much danger there is in thin order books and low liquidity. This causes the price of an asset to collapse.
For your information, a thin order book is relatively few buy and sell orders around market price, making it easier for high-volume traders to move price in both directions.