On Monday, April 25, bitcoin fell to $38,200 for the first time since March 15. As of 13:50 Moscow time, the cryptocurrency is trading at $38,500, down 2.9% in the last 24 hours.
The crypto market is in a state of high uncertainty, ENCRY Foundation co-founder Roman Nekrasov said. According to him, high inflation risks are generally encouraging investment in the crypto market (and bitcoin in particular), as its ability to hedge inflation attracted institutional investors in 2020. On the other hand, market participants expect a 50 basis point increase in the US Federal Reserve's interest rate at the May meeting, which will curb inflation in the US and therefore increase the dollar's attractiveness as a store of value, while conversely, interest in high-tech stocks will decrease.
"Given bitcoin's high correlation with the stock market and the Nasdaq high-tech index, expectations of a US Federal Reserve rate hike are putting pressure on bitcoin. For this reason, the cryptocurrency has failed to consolidate above $40k, and after the current decline to $38k, when positions for about $300m were liquidated, bitcoin risks continuing its bearish trend and dropping another couple of thousand," Nekrasov warned.
According to him, now the level of support has descended to $35 thousand. The expert did not rule out that in the next two weeks we will see the fall of bitcoin to this mark. Nekrasov said a move lower than that is unlikely.
Artem Deyev, head of analytical department at AMarkets, also expects bitcoin to decline. According to him, the cryptocurrency will remain in the $32-43 thousand range for a long time.
Deyev reminded that there are increasing crisis manifestations in the global economy - rising inflation in developed countries, slowdown in industrial production and demand in China due to another outbreak of COVID-19, disruption of logistics and industrial chains amid sanctions from the US and EU against Russia (with the effects of coronavirus restrictions in 2020-2021 have not been safely resolved). Against such a backdrop, investors (institutional investors, first and foremost) prefer to look for protective instruments by reducing risk investments.
"In the near future, we should expect bitcoin to fall to the level of $32k with short-term rebounds to $35-38k. But the asset may not return to the level above $40k in the coming months - there are no serious fundamental factors for that yet," warned Deyev.
Nekrasov added that bitcoin still has a chance to make a breakthrough and overcome the mark at $40 thousand, if in May, the consumption prices in the U.S. will again show strong growth, despite the efforts of the Fed. In that case, the cryptocurrency may rise to $50,000, the expert said.