Bitcoin Price Hits 10-Week Low, Altcoins Experience Major Decline
Volatility returned to the crypto landscape with a bang on May 5, with BTC hitting an almost two-month low. The crash amid mounting global inflation painted a disturbing picture for traders as the king coin inclined closer to the $35,500 mark on Friday. Major altcoins have also endured a severe beating over the past few days.
Fed Decision Sparks Bloodbath in Crypto and Traditional Market
The recent crypto market dive saw BTC log three-day losses of over 11%, while its smaller sibling Ethereum dipped by nearly 7.8% over the same period. Other altcoins that recorded a significant decline include DOGE and SAND, which have dropped by 5.4% and 11% respectively over the past 24 hours.
The broader cryptocurrency arena turned bearish last week after bitcoin faced a rejection at $40k support level. At the start of this week, a significant selling pressure wiped out more gains, resulting in the benchmark crypto slipping below $38k for the first time in 10 weeks. Meanwhile, ETH and other leading altcoins, including Solana, Polkadot, Cardano, and Avalanche, copied bitcoin’s downward price trajectory.
The drastic bloodbath kicked off following Thursday’s Federal Open Market Committee (FOMC). The Federal Reserve agreed on a 50 basis-point interest rate hike during the meeting, sending both U.S. stocks and crypto markets tumbling. BTC slipped over 7% on the day, while the Nasdaq fell 5%, marking the worst trading day since 2020.
Bulls continued to feel the pressure on May 6 as BTC prices headed below the $36k zone. Meanwhile, the S&P 500 and Nasdaq Index continued to experience a sharp decline as the “soft landing” scenario forecasted by the FED to bring down inflation failed to materialize.
In a May 6 interview with CNBC, Galaxy Digital CEO Mike Novogratz warned that the capitulation in traditional markets was far from over. The Federal Reserve’s changes that sparked the Nasdaq sell-off could result in escalating volatility in the crypto space in the near term.
Bitcoin is Entering a Macro Re-accumulation Range
In a recent tweet, famous trader Rekt Capital admitted to his Twitter followers that the BTC had lost one of its critical bull market support levels following its retracement below the $38k range. However, he suggested that the new range low supported the thesis for bitcoin entering a macro re-accumulation phase that mirrored last year’s consolidation in Q1 and Q2.
“Looks like BTC has flipped the ~$38,000 level into new resistance. Which now means…$BTC has confirmed a return to the $28K-$38K range which was home to consolidation in Q1 & Q2 in 2021,” the respected analyst explained.
Rekt Capital’s analysis indicates that despite the crypto market currently following the same trend as stocks, bitcoin could be approaching a crucial demand level. Other market experts have also given an optimistic outlook of the crypto space despite rising interest rates and rampant inflation in the global economy.
In his latest market insights, Bloomberg analyst Mike McGlone shared data highlighting that BTC volatility had outperformed U.S. stocks in recent times. The research suggests that Satoshi’s innovation could beat equities and establish itself as a safe harbor during times of economic turmoil.
