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Bitcoin Plunges Below $25K, Lowest Level Since December 2020
A weak macroeconomic environment and systemic risk from within the crypto space have caused nearly 12 successive weeks of losses for the asset.
Updated May 11, 2023, 6:41 p.m. Published Jun 13, 2022, 6:30 a.m.
Bitcoin plummeted below $25,000 Monday amid weakness in the macroeconomic environment and systemic risk from within the crypto market, data shows.
The asset has slid for nearly 12 straight weeks, falling from nearly $49,000 in March 2022 to under $25,000. It showed some signs of bottoming out in mid-May, but worrying U.S. inflation data released last week did little to cushion falling sentiment.
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The consumer price index (CPI), the most widely tracked benchmark for inflation, rose 8.6% on a year-over-year basis in May, topping expectations that it would decline to 8.2% from April's 8.3%, as reported.
Such data contributed to a fall in Asian markets on Monday. Hong Kong’s Hang Seng fell nearly 3.5%, Japan’s Nikkei 225 fell 3.01%, while India’s Sensex dropped 2.44%. Futures of U.S. technology-heavy index Nasdaq opened 2% lower, while S&P500 fell 1.65%.
According to price charts, bitcoin had strong support at the $29,000 mark, but the fall below that level now means that the cryptocurrency could drop to its 2017 high of nearly $20,000.
Readings on the Relative Strength Index (RSI) – a tool used by traders to calculate the magnitude of an asset’s price move – dropped under 30, suggesting a reversal could be on the way as short-term buyers react to technical data.
Elsewhere, crypto lender Celsius paused withdrawals citing “extreme market conditions,” fueling Crypto Twitter concerns that the company may not have enough liquidity to pay out its depositors.
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Coinbase Sees Crypto Recovery Ahead as Liquidity Improves and Fed Rate Cut Odds Climb
The crypto exchange also took note of a so-called AI bubble that continues to go strong and a weaker U.S. dollar.
What to know:
- Coinbase Institutional is seeing a potential December recovery in crypto, citing improving liquidity and a shift in macroeconomic conditions that could favor risk assets like bitcoin.
- The firm's optimism is driven by rising odds of Federal Reserve rate cuts, with markets pricing in a 93% chance easing next week, and improving liquidity conditions.
- Several recent institutional developments, including Vanguard's crypto ETF policy reversal and Bank of America's greenlighting of crypto allocations, have contributed to bitcoin's rebound from recent lows.
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