These 5 Developments Are Pushing The Bitcoin Price To 10 Thousand Dollars!

The leading cryptocurrency Bitcoin fell 75 percent from its ATH of $ 69 thousand in November 2021. The cryptocurrency market, on the other hand, experienced serious declines as a result of many factors. cryptocoin.comAs we, we are giving you the explanations of the experts about the factors affecting the Bitcoin price.

Why are Bitcoin and other cryptocurrencies crashing?

Cryptocurrency analysts have a number of reasons to highlight. The price of Bitcoin went up to 69 thousand dollars, which is its ATH, when we arrived in November of 2021. Since then, the price has dropped a total of 75 percent and is trading at $16,532. Like any market, Bitcoin moves in bull and bear cycles. The last two years leading up to November 2021 were the most comprehensive bull run for cryptocurrencies.

However, later on, all cryptocurrencies, especially Bitcoin, started their downward movement. To see the effects, analysts look at the weekly chart of BTC. However, most analysts expect the Bitcoin price to likely slide back to $10,000 before it starts to recover.

The first reason for the decline of Bitcoin and altcoins is global macroeconomics, inflation and war

First of all, one of the reasons behind the collapse of cryptocurrencies is inflation and war. Then there is the broader macroeconomics. The economic problems that started after the COVID-19 epidemic and affected the whole world caused central banks to start printing money to stimulate the economy. As a result of additional stimulus measures, inflation has been on the rise in the last two years. Inflation has been increasing since 2021, according to the U.S. Bureau of Labor Statistics. It was also seen to rise above 9 percent in early 2022.

In fact, the inflation rate reached its highest level in 40 years during this time period. As a result, prices rose. There is a significant cost increase in every sector including housing, services, shopping and entertainment.

According to analysts, central banks should try to keep prices under control. Afterwards, it should implement tight monetary policy to stop the economy from growing too fast. However, increasing interest rates are used to combat rising inflation. Also, the cost of borrowing is much more expensive. Therefore, there is less liquidity in the capital markets.

The US Federal Reserve has been increasing interest rates since March 2022. According to analysts, this was implemented to rein in inflation. As a result, interest rates rose at the most aggressive rate since 1980. The US Federal Reserve increased interest rates by 25 basis points (BPS) in March. Then, at the May meeting, they raised another 50 BPS. In June, significant increases took place at 75 BPS, and with Bitcoin, altcoins fell rapidly.

Since June, the Fed has increased 75 BPS in July, September and November. As a result, the current US interest rate currently stands at 4 percent. Meanwhile, the interest rate is expected to be much higher. Apart from that, Russia has declared war on Ukraine since February 2022. Cryptocurrency analysts are reminding investors to be cautious until uncertainties clear.

Terra LUNA’s downfall

After the initial interest rate hike, one of the top 20 projects in the cryptocurrency markets collapsed. As a result, it increased the downward pressure in the sector. According to analysts, it is one of the first reasons for Bitcoin to move towards $10,000.

Analysts came up with the potential $10,000 price expectation for BTC during the Terra LUNA crash. On May 7, 2022, TerraUSD (UST), the stablecoin of the Terra ecosystem, lost the $1 stable. Then the cryptocurrency market fell. The UST price dropped to 35 cents on May 9. It continued to decline in the following weeks. Terra’s altcoin, LUNA, fell from $80 to less than 10 cents by May 12.

Bitcoin fell from $ 40,000 to $ 26 thousand. This was the first breakdown of the strong support structure for 2022. The fluctuations increased with the effect of the global macroeconomic crisis. Alongside this, prominent cryptocurrency hedge funds like Three Arrows Capital also disappeared after the Terra crisis.

Bankruptcy came as a result of the liquidity crisis in FTX and Bitcoin

The Luna collapse did not remain the only problem in 2022, after which many companies went bankrupt. However, the recent FTX crisis brought with it bigger problems and damaged investor confidence. On November 11, 2022, FTX.US filed for Chapter 11 bankruptcy. Making matters worse, the exchange suffered a hack that saw $600 million withdrawn from their wallets.

It is stated that the Bitcoin exchange collapsed due to lack of liquidity and mismanaged funds. Binance CEO Changpeng Zhao was about to sell all FTT tokens related to FTX’s liquidity crisis, in a tweet he shared.

All FTX users, who rushed to the stock market to withdraw money, panicked. As a result, the liquidity crisis in FTX worsened and eventually bankruptcy occurred. After the FTX crisis, Bitcoin price dropped from $21,300 to $15,500. Thus, it caused another 25 percent price drop in BTC. This price drop caused BTC to surpass the 200-week moving average level.

Losing critical support at BTC 200 Weekly Moving Average

The 200-Week Moving Average level has been a technical support point for most analysts in the industry. Bitcoin has met the 200 MA price on four separate occasions in its history. As a result, he came back from this level every time. However, after the FTX crisis, the market fell below the critical support level for the first time.

A loss of the 200-Week Moving Average means that the next critical support level is currently $10,000.

Bitcoin fear and greed index

Finally, the fear and greed index is one of the reasons why Bitcoin price will go to $10,000 before recovering. According to analysts, if investors are optimistic about the future price of Bitcoin, then sentiment rises. Then they continue to buy.

But on the other hand, if investors are panicking about the Bitcoin price, then the sentiment will be low. As a result, sales activity will begin with it.

The crypto fear and greed index is used to analyze sentiment. It is currently at one of its lowest levels in history. As a result of the extreme fear, the market is likely to continue bearish until it reaches the next big psychological level, i.e. $10,000.