Bitcoin price dips to 10-month low as volatility rules
Bitcoin's value has continued to remain rangebound between AUD$38.5k and $47k for over 72 hours.
- The ongoing crypto crash coincides with many prominent stocks also losing 25+% of their values.
- Experts believe that BTC needs to trade above AUD$43k (US$29.6k) to regain bullish momentum.
- Bitcoin's market dominance against other altcoins rose to a 6-month high on 12 May, currently standing at 45%.
For the first time since July 2021, Bitcoin has stayed below the AUD$43.5k (US$30k) threshold for a considerable time. After sliding to AUD$38,600 earlier today, the asset has made a minor comeback, currently trading at AUD$44,310. BTC is exhibiting a 24-hour gain of +6.6%.
The ongoing crash has not been restricted to digital assets, with many prominent stocks also recording heavy losses of 25% or more. Prominent S&P 500 index listings such as Illumina, Caesars Entertainment and Shopify have seen their values drop by 27%, 25% and 28% respectively over the past week.
Traders are uncertain as to what's causing this volatility across the stock and crypto markets. However, many believe that the Federal Reserve's monetary tightening policies could be partly to blame. The central bank recently bumped up interest rates by 0.5% and has also revealed its intentions to sell bonds and other debt-related instruments to curb rising inflation.
Between 2017 and 2021, the stock market recorded gains of 110+%. The ongoing downtrend is a potential result of misguided valuations and extreme investor overconfidence.
What lies ahead for the market?
Popular market analyst Michaël van de Poppe says that the stock market could be on the verge of a minor trend reversal, which could provide much-needed respite for Bitcoin. He believes that if BTC is able to break past its AUD$43k (US$29.6k) resistance cleanly, traders may be able to push the asset to AUD$46.5k (US$32k) in the near term.
Bitcoin's market dominance index (DI) — a metric that gauges the currency's total market share in relation to other competing altcoins — recently rose as high as 45%, its highest level in 6 months. This indicates that traders may once again be turning to BTC as a long-term store of value (SOV), especially as financial volatility continues to ravage the market.
Disclosure: The author owns a range of cryptocurrencies at the time of writing.