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Once above $60,000, Bitcoin is now below $40,000. That's not only a big loss but also a key technical level: 200-MA is providing support here. Further below, it'll be already $30,000 and pretty much nothing holding the primary cryptocurrency from going down. Is it possible? Yes.
First, while corporations are increasingly interested in decentralized finances and digital tokens, state financial institutions are increasingly unamused with the out-of-control perspective it suggests to the global economy. Hence, governments are strategically interested to crack down on the digital economy and put as much control on it as possible. Therefore, it is essentially a clash of interest: states want more control, businesses and individuals want more freedom. Now, as the Chinese officials reiterated that no digital asset can or should be used as a means of payment like fiat money, crypto investors got a part of their hope of digital freedom slashed. Bitcoin reacts accordingly.
Second, the crypto market is highly volatile - to an extent that it makes all-time highs just blindly believing announcements of "big people" such as Elon Musks. As such, it's a trade-rumor scheme in its most perfect form: Elon Musk tweets - the market flies. Now, we're observing the flip side of the coin. Elon Musk said - Bitcoin goes down. To be precise, Elon Musk doesn't bear responsibility for the over-reacting of the market: the "Imperator of Mars" is free to speak as he pleases. It's the market participant who like stretching what they get from Musk's words and making another reason for Bitcoin to fly - or fall.
At the end of the day, remember 2017: with all the interest from the institutional investors, we may be heading into a big multiyear correction where the current $40,000 will turn out to be another once-achieved and quickly-abandoned high.
Remember you can trade Bitcoin in FBS Trader!
Wait and observe. As in most cases, it's the best reaction to what you cannot really explain nor control. When the plunge stops, give it another day or two - or even a week or so - to make sure there is no further downside looming and pick it up on the upside reversal if you want to catch the next upswing.
With Bitcoin, it may be $60,000 - or $20,000 - just in a few weeks... or days. Both options are possible.
Have a look at the key financial instruments on Monday, February 28. Geopolitics is currently on all news frontlines. Western nations escalated sanctions on Russia for the invasion of Ukraine.
The United States will publish the Initial Jobless Claims on Thursday, December 30, at 15:30 GMT+2 (MetaTrader time).
The United States will publish the ISM Non-Manufacturing PMI on Thursday, January 6, at 17:00 GMT+2 (MetaTrader time).
Main news that will drive the market in the upcoming week include CB Consumer Confidence Index, Canadian GDP, and US Core PCE Price Index
The Federal Reserve (Fed) will announce its Interest Rate Decision and make a statement about the future monetary policy on Wednesday, September 21, GMT+3. After the higher-than-expected inflation numbers published on September 13, there’s almost no doubt the Federal Reserve will come up with another 75-basis-point rate hike. However, surprised by the CPI numbers, several Fed members announced the possibility of a 100-basis-point rate hike on Wednesday.
Every week we expect many interesting events that can shake the market.
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