‘Synchronous rout’: experts name the reasons for Bitcoin’s fall
On April 23, Bitcoin fell below $50,000 and lost more than 8.6% in value, but as of writing it had retraced to around $50,264.
ForkLog spoke to experts about what influences the coin’s price and how prolonged the current correction may be.
Yuri Mazur, Head of Data Analysis at CEX.IO Broker, said that Bitcoin had closed below its 50-day moving average as early as April 20.
“This was evidence of a clear lack of investor demand for Bitcoin to offset the drop since April 14. Given the evident tendency toward further decline, a full reversal of the uptrend becomes the most likely scenario,” he said.
He cited CEX.IO’s April 21 breach of the local support level at $55,945, with the pair closing at $53,946.
“Some support for Bitcoin could come from the Fibonacci correction level 4.236 at $48,051. However, a continued drop is more likely at the moment than a rebound. If the Fibonacci correction level 4.236 is breached, our target would be $45,211,” added Yuri Mazur.
The expert did not rule out that one of the dump’s causes could be the sudden closure of the largest Turkish cryptocurrency exchange Thodex. The platform’s wallets together held around $2 billion.
Also, in his view, the prospect of U.S. President Joe Biden increasing the capital gains tax to 39.6% could accelerate Bitcoin’s price decline in the near term.
Joining this view is Denis Voskvicov, head of Exantech’s data center:
“Investor concerns are explained by dubious sentiment in the states — Janet Yellen, the U.S. Treasury secretary, wants to tax crypto heavily, and Biden wants to raise taxes on the rich in general,” he said.
Voskvicov suggested that some investors would rebalance their portfolios and include a larger share of alts than currently.
“But outflows are unlikely to be large or quick, since the regulator’s threat affects the entire cryptocurrency market, not just Bitcoin,” he noted.
Yanis Kivkulis, Exante’s lead strategist, called the correction inevitable, noting that Bitcoin had “one all-time high after another” and buyers would eventually run out.
“We haven’t heard for quite some time news of purchases by large funds or media personalities, while levels around $65,000 for most investors are not just profitable, but highly profitable,” the expert explained.
Retail demand will not be able to offset price pressure if large capital starts selling the asset on over-the-counter platforms, Kivkulis warned:
“For retail non-professional investors to continue buying actively, they must continuously witness the asset’s capacity to grow. The direct listing Coinbase was considered by many analysts as the final chord of the bulls’ rally.”
He also linked Bitcoin’s decline to Biden’s tax announcement and subsequent sell-off of securities in the U.S.
“Now Bitcoin could fall as low as $44,000, where the asset’s fate will be decided. If the bears show particular activity, we may well see a trend reversal,” the strategist suggests.
The tax increase is a major factor for the correction, continues Grigory Klumov, founder of the stablecoin platform STASIS. He says this will force American funds and major Bitcoin investors to calculate “excess profits and draw conclusions.”
According to Sergey Troshin, head of the Six Nines data centre, the current situation in the crypto market is driven by a global correction:
“Bitcoin and other cryptocurrencies are joining global markets and are now moving in sync: first they rise, then they rise sharply, then they correct.”
The expert does not see a link between the tax rise in the United States and crypto markets, arguing that the link with traditional assets is “psychological and contrived.”
“In terms of sentiment, investors are simply panic-taking profits. And essentially a drop of less than 20% is merely a small correction after astronomical growth,” Troshin noted.
When Bitcoin retreats significantly, expect limited strengthening in altcoins, says Yuri Mazur:
“That’s too risky and does not promise meaningful returns. In the last 24 hours the average altcoin price fell 10%–20%. Ethereum, according to CEX.IO, fell 8.3% since the market opened on April 23, and at times fell more than 12%.”
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