After compounding recent losses, bitcoin prices fell today and were briefly trading at the $28,000 level.
According to data, it had dropped by over 8% at this point after climbing to around $30,400 two days earlier.
Analyst Tim Enneking highlighted the crucial role played by the Federal Open Market Committee (FOMC), which has raised its benchmark federal funds rate by 475 points since March 2022.
When this group of 12 policymakers meets at the beginning of the following month, many anticipate another rate hike announcement.
The May 3 FOMC decision has basically put the entire world (crypto and fiat) on tenterhooks, according to Enneking, managing director of Digital Capital Management.
Although there has been a general decline in the correlation between cryptocurrency and fiat this year, significant events continue to influence it, and the impending FOMC decision has stopped cryptocurrency’s upward trend, he said.
That, along with regulatory uncertainty (the SEC and Bittrex, MICA), banking issues (Silvergate, Signature), and contagion fears (banking, commercial real estate), he said, are all working together to create a retracement after what has been, for BTC especially, a major move up.
The lack of regulatory clarity was also brought up by independent cryptocurrency researcher Armando Aguilar, who mentioned that big exchange Coinbase has sought for a licence in Bermuda and may leave the United States.
Other factors, such as “Large liquidation orders of BTC in major exchanges, specifically Binance,” and the testimony U.S. Securities and Exchange Commission Chair Gary Gensler gave to the House Financial Services Committee earlier this week, were also mentioned by the speaker as potential causes of recent market declines.
However, some analysts viewed the losses bitcoin experienced over the past several days differently, seeing them as expected given the recent increase in price of the digital currency.
According to Scott Melker, host of The Wolf Of All Streets Podcast and writer, investor, and analyst, “for now, this is nothing more than a healthy retracement after an overextended move to the upside.”
Cofounder of the crypto fund of funds AltAlpha Digital, Marc Bernegger, also offered his opinion.
He personally believes that the significant gains in recent weeks drove investors to take some profits off the table, which may have been the catalyst for this latest long squeeze, in which downward action forced many traders to close out their long positions.
