Bitcoin make a brief bounce back this week after hitting the US$33,000 resistance level
With the whole economic sphere going through a slump, many people might’ve thought of investing in cryptocurrencies. Although their intentions are straight, the cryptocurrency market is playing around right now. Yes, Bitcoin has shown cryptocurrency investors the worst volatility it can bring in the past week. Bitcoin’s price broke through the US$33,000 resistance level on 24th January morning, only to bounce back to US$38,000 in the evening. The investors are now even more confused about whether to take it as a positive or negative sign.
Since hitting an all-time high in November 2021, BTC is on a downward trend. The cryptocurrency lost almost 45%, falling from its record price of US$69,000. Despite surviving the economic punches for almost thirteen years now, the volatility of Bitcoin still remains at its helm. This time around, a handful of factors have contributed to the digital token’s price fall. It includes Federal Reserve’s initiative to increase interest rates, Kazakhstan’s internet shutdown, multi-million dollar Bitcoin scam, and Russia’s cryptocurrency trading and mining ban. However, long-term cryptocurrency investors are not very shaken about the price swings. According to Charlie Bilello of Compound Capital Advisors, this is the eighth Bitcoin that has fallen below 50% since its inception. Although BTC has evidently proven to be the riskiest asset, cryptocurrency investors are still crazy about it. But in order to bring out Bitcoin’s price from this back-to-back price plunges, the cryptocurrency sphere needs catalysts right now.
A New Factor Contributing to Bitcoin’s Fall
Initially, Bitcoin’s price decline started after Federal Reserve came out with new stimulus initiatives. But recently, there are new rumors spreading on ‘regulating the digital assets’. Investopedia has reported that an unidentified source within the Biden administration has informed that the US government is planning for a new strategy to address the economic, regulatory, and national security pain points caused by Bitcoin and other cryptocurrencies. It further insisted that the authorities are working on the Biden administration’s strategy to bring more regulations for cryptocurrency transactions.
While some people think that regulations are a good thing in the cryptocurrency market, prime investors seem to vary in their thought. This has resulted in many pulling back their potential Bitcoin investment after the reported speculation.
How is BTC’s Price Fall Reflecting on the Market?
There are generally two types of investors in the cryptocurrency market- long-term and short-term investors. For the long-term investors, these price swings might seem simple and expected. There are high chances that these cryptocurrency investors might’ve been through at least a couple of big dips. But the story could be different for short-term investors. Some even invest in the dip and sell-off in the bull run. For them, this Bitcoin’s price plunge could be a hard thing to accept.
On the other hand, we also have other cryptocurrencies that take after Bitcoin. Generally, BTC is synonymous with the cryptocurrency market itself. Except for memecoins and stablecoins, all other virtual tokens follow the footprint of Bitcoin. Therefore, following Bitcoin’s price fall, altcoins are also going through a gloomy period.
US$33,000 Acts as a Cushiony Layer
Every time Bitcoin is going through a slump, the graph creates a cushiony resistance level called ‘psychological barrier’ from where it could bounce back. For now, BTC’s psychological barrier is standing at US$33,000. Even on January 24, Bitcoin tried to retreat after breaking through the resistance level briefly.
According to experts, if Bitcoin’s price manages to hold above US$30,000 for a week, it will create a cushiony layer that will help the cryptocurrency to make a comeback. Unfortunately, there is no 100% assurance. Since the market has lost confidence in Bitcoin, there are chances that it could fall through the resistance level.
What Could Help Bitcoin Make a Comeback?
Amid the ongoing crisis and back-to-back hits, there is still hope for Bitcoin investors. A number of key changes and initiatives have the potential to help BTC recover from this slump.
- Morgan Stanley has become the first well-known US bank that allows its users to access Bitcoin funds. If more banks come forward to acknowledge Bitcoin and other cryptocurrencies, then it will work out well for investors.
- Tesla will again accept Bitcoin payments when more than 50% of its energy usage comes from renewable resources. On the other hand, Amazon’s recent job posting for a blockchain product lead has also indicated its willingness to accept Bitcoin payments. In a nutshell, institutional investments and using Bitcoin as trading money could help the digital currency make a comeback.
- Finally, we have countries legalizing Bitcoin. Already, El Salvador has recognized BTC as a legal tender in the country and more countries are expected to follow suit.
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