The market of cryptocurrencies remains expectant while experts indicate that there will be more suffering following the Federal Reserve tightens monetary policy. “The digital asset is hovering around significant support as investors begin to price in much more aggressive Fed tightening,” said Edward Moya, an analyst at Oanda.
Technical analysis suggests that the world’s most traded digital currency is struggling to break above the $38,800 barrier, with falls to lows of regarding two months in the range of $37,500. If Bitcoin persists in its bearish endeavor below the $39,000 level, it might depreciate significantly. However, there is hope as a clear move above the 23.6% retracement level of the key decline was seen from the roughly $40,350 high to $37,400 low.
Experts now fear that the price of cryptocurrency Principal might fall further if it fails to maintain the $38,000 price level. Also, profit booking by traders may be why Bitcoin is struggling to break above the $40,000 level.
“Over the weekend, Bitcoin’s recovery was put on hold. The rejection of levels near $40,000 might be attributed to profit taking. Simultaneously, support at $38,000 might hold due to increased buying sentiment,” Darshan Bathija, CEO and co-founder of Vauld, told FE Online.
However, “the cryptocurrency might continue to decline if the market volatility continues in May,” Moya comments. “The $35,000 level should provide important support for bitcoin, but if the Federal Reserve decides to be more aggressive in tightening its policy, the drop might be heading to the $30,000 region,” comments the Oanda expert.
On Wednesday, the Fed will discuss a 75 basis point hike, but will most likely decide on a 50 basis point increase. The market discounted a strong start to the cycle of rate hikes, “but the big question is how aggressive they will be with the quantitative adjustment,” concluded Moya.
In any case, the medium and long-term trend of Bitcoin is bullish, according to specialists, despite the threat that the most popular crypto will suffer a significant short-term drop.
“It is not the first time that there have been big falls in Bitcoin, there were other previous and worse ones and, sooner or later, it always ended up recovering, even setting new highs. Throughout history, in the face of all the growth that Bitcoin has had, central banks and governments have always tried to generate fear in societies and people, either through interest rate adjustments, prohibitions or other mechanisms. , all to generate fear once morest cryptocurrencies”commented to Scope Francisco Guglielmotti, Crypto Specialist at NW Professional Traders.
For the expert, Bitcoin ended up showing that “it is superior to these limitations, both blockades from China and prohibitions from the United States or other countries. It always came out ahead, setting new highs.”
“While we are not in a bull season, it is critical to be aware of market cycles and to know that the cycle we are in now and the current downturn is normal and not the first time it has happened. You have to have experience and knowledge of the market and it is an excellent opportunity to top up portfolios at offer prices because, sooner or later, the long-term trend is bullish”, remarked.