Bitcoin fell sharply. What will happen next

Posted 12 May, 2022

The cost of the first cryptocurrency fell to a minimum in the summer of 2021. The experts explained what it was connected with and how it affected the market prospects.

On May 11, the bitcoin rate fell by 8% per day, updating the minimum since the summer of 2021 at $29 thousand. Then the value of the asset returned above $31 thousand, as of 18:20 Moscow time it is trading at $31.2 thousand. Cryptocurrency declined simultaneously with the US stock market.

The US Bureau of Labor Statistics reported that consumer prices in the country rose 8.3% year-on-year in April, while core inflation (increase in prices for goods and services excluding food and energy) was 6.2%. The increase in consumer prices exceeded the analysts' forecast (8.1%) and remained close to forty-year highs.

“The Fed will continue to raise the rate, and, perhaps, in wider steps (by 0.75%) – such inflation cannot be slowed down by the indecisive actions of the regulator. Moreover, it is quite obvious that the Fed, with its soothing rhetoric throughout 2021, simply overslept inflation,” said Artem Deev, head of the analytical department at AMarkets.

According to him, raising the Fed's rate will lead to investors avoiding risk. This means that the capitalization of the crypto market and digital assets will decrease, the expert claims. At the same time, he added that there are no factors for a significant increase in bitcoin, even in the event of a technical rebound in the rate, a further decline should be expected.

“During the second quarter, marks at the level of $20 thousand per coin or lower are possible,” Deev predicted.

The situation in the financial markets remains uncertain due to the upcoming meeting of the US Federal Reserve, added BitRiver financial analyst Vladislav Antonov. According to him, $29,000 is an important support level, after which the road to the next $20,000 mark opens.

 

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