Bitcoin slumps to a six-week low amid ever-increasing macro uncertainties.
S&P 500-linked futures, stock markets and gold also suffered from the negative atmosphere and fell. As the dollar continues to strengthen, the dollar index surpassed 101 for the first time since March 2020.
Why Is It Falling?
Risk assets faced selling pressure as the coronavirus outbreak in Beijing triggered a lockdown fear that would push inflation further. The country weighed in on lockdowns to contain the virus. The fact that this development occurred on the back of the Fed’s 50 basis points interest rate hike statements reinforced the negative atmosphere in asset prices.
Will the Downfall Continue?
Illan Solot, partner of Tagus Capital Multi-Strategy Fund, said that even at the low levels in January, investors were not in such a pessimistic mood. Matthew Dibb, COO and co-founder of Stack Funds, warned of further declines:
“If macro sentiment weakens further, we could see BTC drop as low as $33,000. During Friday’s trading, we observed steady selling in line with the Nasdaq’s downside. We expect this to continue in the near term and to be tightly correlated with equities.”
Laurent Kssis, managing director of the fund company Hashdex, also said that he maintains his expectation of a decline in Bitcoin in the short term.
Bitcoin is trading at $ 38,700 at the time of publication.
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