Bitcoin, the supreme cryptocurrency, has lately been a victim of extreme market volatility. Despite sailing through the bullish onset of the market, Bitcoin seems to be crashing down after briefly touching the $70K mark.
While some believe that the pre-BTC halving jitters are gnawing at the BTC price levels, the current economic stance, coupled with the rising geopolitical tensions, is also heavily responsible for battering Bitcoin to hit new lows.
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Three Reasons Why Bitcoin Is Falling
Geopolitical Storm (Israel-Iran War)
The rising geopolitical tensions between Israel and Iran are heavily contributing to the fall of Bitcoin. Despite basking in the bullish market stance, where investors are keen to embrace Bitcoin through ETFs and active trading, the price of Bitcoin has yet to reach a stable threshold. The token is yearning for a resurgence but is continuously being battered down due to rising geopolitical tensions, which are turning investor sentiment sour and skeptical.
With new updates concerning war conditions worsening in the region pouring in, Bitcoin is being dumped heavily by investors to safeguard their interests and profits in the wake of escalating war tensions.
The Federal Reserve’s Stance on Inflation
The US economy is currently gripped by fears of inflation, keeping investor sentiment cautious and dry. In a new meeting held yesterday, Fed Chair Jerome Powell announced new plans concerning the us economy. Powell shared that the FED will not cut rates as of now, triggering a wave of mayhem in the market.
With the ballooning debt metrics that the US economy is embroiled in, the current FED stance may accelerate excessive lending and borrowing. which may inflate the US debt metrics to breach dangerous levels. This may trigger a bond market collapse, followed by an asset market crash, triggering a complete economic meltdown.
The said development spurred speculations of asset market momentum turning bearish, compelling investors to adopt a panic-stricken stance. This further escalated the Bitcoin dumping spree, adding more pressure on the current price threshold of Bitcoin.
FOMO and Erratic Investor Behavior
With Bitcoin ETFs in the mix, investor sentiment towards Bitcoin has turned greedy. In trading analogy, greed refers to the purchase of an asset in hopes of securing prolonged profits soon.
A nuanced trader who knows the basics of trading would initially hold the asset for a set duration before selling it out in the market. However, amid rising war tensions, and FOMO fueling the market, investors are selling assets rapidly. This may also contribute to the frequent price fluctuations that Bitcoin is experiencing at the moment. This may also compel the token to undergo stark price declines and dips. Retail greed can also manifest as overtrading, sentimental trading, and panic selling, which can indirectly promote BTC price degradation.
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