Crypto enthusiasts were happy to see Bitcoin prices recover above $43,000 earlier today. On the other hand, the crypto market witnessed yet another sudden crash, bringing prices lower for the day. Instead of recovering from the previous crypto crash, prices suddenly dropped by an average of 3%. What caused this sudden price drop across cryptocurrencies? In this article, we’re going to see what was the main driver for this Bitcoin price crash, and try to assess what’s to come.
CBDC Talks are still Vague
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There are currently talks in the US about creating a digital rendition of the US Dollar. Not only will this speed up payments and provide payment safety, but also gives privacy to the end-user. Of course, this is a very big project in case it was to be implemented. The Federal Reserve had a long discussion about that earlier today and issued a paper highlighting the pros and cons of having a central bank digital currency, or CBDC.
The talk was still preliminary with no hard decisions taken and highlighted the importance of having a centralized digital currency versus a decentralized alternative. This fact made the crypto market retreat slightly, hence prices dipping left and right in the crypto market. The overall crypto market cap slipped by more than 3% intraday.
Bitcoin Price Crash – Will BTC prices break 40K lower?
The $40,000 price mark is a very strong support level for Bitcoin. Not only does this area represent a strong psychological price, but also big companies purchased Bitcoins previously around this price. If Bitcoin prices were to fall lower, this means that those companies will start losing. An example of such companies is Telsa, which purchased back in February 2021 Bitcoins and paid around $1.5 Billion.
If we look at figure 2, we can clearly see how Bitcoin reached that strong support area. This is where we reach a very important crossroad: prices will either break lower, or retrace higher.
It is easy to predict two courses of action, but technical traders see this opportunity as a solid BUY. This is because technical traders tend to open buy positions around strong support areas, regardless of fundamental situations. Bitcoin prices need to retrace higher and reach around 48K in order to officially end the downtrend. So far, there is no sign of reversal, yet.
The Crypto Market at a Glance
In the past 24 hours, the entire cryptocurrency market was seen down by -3.10%. The top gainers were basically ATOM and OSMO, who barely made +4.7% and +2% respectively. On the other hand, the top losers were SCRT, LRC, and ALGO which lost respectively -15.4%, -10%, and -7.7%.
1- Bitcoin (BTC) : – 2.6 %
2- Ether (ETH) : – 3.4 %
3- Tether (USDT) : 0 % (surpassing BNB)
4- Binance Coin (BNB): – 5.0 %
5- USD Coin (USDC) : + 0 % (surpassing ADA and SOL)
6- Cardano (ADA) : – 5.3 %
7- Solana (SOL) : – 5.9 %
8- Ripple (XRP) : – 2.2 %
9- Terra (LUNA) : – 2.7 %
10- Polkadot (DOT): – 4.1 %
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