Petik.net - The turbulence in the crypto market has recently intensified, as Bitcoin (BTC) plunged below $28,000, marking a drop of more than 9% from the previous 90-day high of $31,005 on April 14.
As of April 20, BTC was hovering around $28,044, leaving investors and traders to ponder the factors that led to this drop.
Amid this price drop, Bitcoin mining difficulty has soared to a historic high, creating an interesting contrast and worthy of further exploration.
Factors Behind BTC Drop
Disappointing first-quarter earnings in equity markets, including Tesla's, have impacted various sectors, causing the S&P 500 and Nasdaq Composite to fall 0.6% and 0.8%, respectively.
Analysts lowered Q1 EPS estimates for companies in the S&P/TSX Composite by 8.9% from Dec. 31 to Mar. 31, which was the largest quarterly decline since Q2 2020. #earnings, https://t.co/rZraZqKzVi pic.twitter.com/1kJNtOziUw< /a>
— FactSet (@FactSet) April 20, 2023
Due to its interrelated nature, poor first quarter earnings in equity stocks could trigger a free fall in Bitcoin prices.
A downturn in traditional markets may make investors more inclined to be risk averse, impacting the demand for cryptocurrencies.
The domino effect and the correlation between stock and crypto prices can reduce the value of Bitcoin.
Reasons for shorts:
– supply > demand, due to bad macros (high rate)
– competition heating up, demand in pressure
– price cuts, margin pressure
– FSD did not come to fruition
– Elon sells more for his venture
– market sell off due to earnings decline and recession pic.twitter.com/xyZGQRNijS— Mike (@Szwalking) April 17, 2023
In addition, investors who suffer losses may sell their BTC assets, which could exacerbate the downturn.
With less income to invest in riskier assets, reduced capital flows could amplify downward pressure on the Bitcoin price.
As a result, investors are taking a more pessimistic view of Bitcoin's near-term price, with a surge in demand for short-term downside protection.
Mining Difficulty and Highest Hash Rate
Despite the bear market sentiment, Bitcoin mining difficulty has risen by 1.72% to a record high of 48.3T.
The network's average hash rate at the same time hit a new record high of 348.2 EH/s, reflecting increased miner participation.
This resilience in mining activity indicates that Bitcoin's long-term health remains strong, despite its volatile price.
Impact on Crypto Markets
Bitcoin's decline affected other major cryptocurrencies, with XRP and MATIC suffering nearly 5% losses. Despite the downturn, many investors remain confident in Bitcoin's long-term prospects.
Factors such as the Fed rate decision, on-chain trends, and medium to long term technical indicators suggest that the future of cryptocurrencies is still bright.
Key Levels and Stock-to-Stream Prediction
Bitcoin's recent slide points to possible trouble as it returns to a lower price range, surrendering a critical level of support.
Market watchers should keep an eye on the $27,600 threshold, which can be breached but calls for a quick rebound.
Failure to cross $28,800 could push the price down to $26,200.
#Bitcoin is currently showing w
Broke back in the range, lost one of the crucial levels.
Final crucial level is at $27,600. Could take liquidity below, but needs a fast recovery.
If not, and no break of $28,800, then I suspect we'll see $26,200. pic.twitter.com/TuCaFq8eIk
— Michaël van de Poppe (@CryptoMichNL) April 21, 2023
Meanwhile, the stock-to-flow (S2F) model offers guidance for future price points, highlighting $32,000 as the S2F standard deviation range of 1, $60,000 as the pre-split S2F model value, and $100,000 as the lower end of the $100,000-$1,000,000 range. which is centered around the expected S2F value of $532,000 after the 2024 split.
My Jan 12 prediction is in line with the S2F model:
1) ~$32K is S2F 1 standard deviation band
2) ~$60K is S2F model value and just before halvings (dark blue) BTC seems to hit S2F model values
3) $100K is the bottom of my 100K-1M range around $532K S2F model value after 2024 halving https://t.co/V74Y8VYCVo pic.twitter.com/EVqO6jWH6X— PlanB (@100trillionUSD) April 20, 2023
As BTC grapples with this key price point, investors and traders will be watching the market for signals that can help determine its direction.
Despite this, many investors continue to believe in Bitcoin's long-term prospects. Factors such as the Fed's interest rate decision, on-chain trends, and medium to long term technical indicators suggest that the future of cryptocurrencies remains promising.
While the Bitcoin price continues to fluctuate, mining difficulty and hash rates continue to increase. This creates an interesting contrast between Bitcoin's short-term and long-term performance that is worth exploring further.
Despite the factors that contributed to the decline in the Bitcoin price, the resilience of the mining network means that this cryptocurrency continues to show signs of good health in the long term.
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The information provided in this article is for informational purposes only and should not be considered as financial or investment advice. Cryptocurrency investments are subject to market risks, and readers should exercise caution and do their due diligence.
