If the crypto experts were to name 2022, it would be called the most chaotic year after the pandemic. Besides being a bearish year for the crypto industry, the industry has entered a bloodbath.
This might seem surprising, given Bitcoin attained its all-time high value in November 2021. However, this changed at the start of 2022 in February, with Russia invading Ukraine and sending shockwaves throughout the global financial BTC markets.
Unsurprisingly, even the crypto market took a massive hit, with prices falling continually since then. Many experts suggest this might be the beginning of another long crypto winter.
Bitcoin, one of the most performant cryptos in the market, has been losing its value, ultimately reaching a low of $16000 as of now. Besides that, the collapse of FTX has also contributed to this downfall.
Interestingly, that’s not all! Continue reading in the following weblog sections as we get into the more detailed side of this fall. Let’s get started.
Factors Affecting The Price Of Bitcoin
There are not just one or two factors that can affect the prices of Bitcoin; there are many factors at play here. But since Bitcoin is still one of the most potent cryptos in the market, the general trends in the market do not affect it to a great degree.
If anything, Bitcoin sets the trend for every other altcoin in the market. That said, any big news in crypto, especially related to other major coins such as Shiba Inu and Ethereum, can still impact the token’s prices.
Besides that, non-crypto-related news can also impact Bitcoin prices. One great example of this is the price action in the spring of 2020 and also Russia’s invasion of Ukraine in more recent times.
Hence, Bitcoin prices are still affected by all the news worldwide. Of course, this news can be related to Bitcoin or not, but there will always be a slight impact on the overall price movements in the industry.
In most cases, prices go up whenever there is news of the mass adoption of cryptocurrencies or even a new technological breakthrough in the industry. But, on the other hand, any form of uncertainty, regardless of its scale, will again impact the overall price movements of the token.
How Did The Entire Fiasco Unfold?
The current situation of the crypto markets hints at a severe bearish trend, with prices on a freefall. Most experts predict that Bitcoin might slip to a low of $14000 after evaluating all the recent charts and figures.
Last week, Bitcoin’s value fell by a staggering 22% resulting in the token hitting a two-year low of $15,600. Of course, this fall was primarily triggered by the collapse of one of the leading crypto exchanges, FTX. This decline marked the downside break of months of sideways or horizontal trading above $18000, opening a new door for a massive sell-off.
Strategists from Morgan Stanley wrote a note to clients stating that since Bitcoin has now broken below the $18000 mark, the prices might fall even lower. They added that the following levels to keep an eye out for are $13500, the high of 2019, and $12500, the high from the third quarter of 2020.
BTC Is Taking Dips
One cannot deny that these range breakouts or breakdowns generally bring a noteworthy decline or rally. As per the technical analysis theory, an asset tends to build potential energy during the consolidation phase.
This energy is not wasted but unleashed in the direction they breach the range given enough time. This means the longer the consolidation, the more prominent the stored energy and post-breakdown or breakout move will be. This is why experienced traders avoid trading against range breakouts or breakdowns.
On a note, Crypto analysts at Delphi Digital mentioned imagining the consolidation range as a spring gradually wounding up and filled with potential energy. With potential energy stored over time, it’s added with each successful rebound off of support and each rejection from the opposition.
The authors continued that an impulsive move, similar to the coiled spring’s initial unwind, can be very forceful when prices ultimately break out of the range.
Nevertheless, it is essential to remember that technical indications seldom falter and frequently provide tangible proof. But the current Bitcoin range will cause more significant issues for the sector as a whole. Additionally, the fall of FTX and the unfavorable macroeconomic environment will contribute to keeping investors’ appetite for risk under check.
The Industry Has Its Worst Catalysts In-Play
A team from Delphi went on to note that recent developments in the industry have been one of the worst catalysts impacting both prices of assets along with the overall sentiment of investors.
They added that the recent adverse macroeconomic situation coupled with the collapse of FTX would result in a continual downside to the path of least resistance, contrary to a much-needed reversal. The team also noted that these developments might keep Bitcoin’s prices between $14000 to $16000.
Another observation came from Micheal Oliver, the founder of Momentum Structural Analysis. He said that the flush of Bitcoin through lower ranges might have started the bottoming process for the crypto. But, unfortunately, the way things are going at the moment, the BTC market might fail to find the bottom anytime soon in this environment.
On a weekly note, Mr. Oliver further stated that the analysts’ team suspected the lower end of the run, and the BTC market might be unable to find an effective low until December. However, there’s no stopping it for now.
What’s Next For Bitcoin?
The crypto market is as volatile as it can get in the modern financial world. Hence, there is no effective way to decipher a crypto token’s future. However, given the recent trends and development in the market, Bitcoin is not recovering anytime soon.
But again, you must always keep your eyes and ears open to make sense of everything going on in this sphere.
