Bitcoin prices dropped today, flirting with the $28,000 price level after building upon their recent losses.
The world’s most valuable digital currency by market capitalization declined to $28,010 this afternoon, according to CoinDesk data.
At this point, it was down nearly 8% after rising to approximately $30,400 two days earlier, additional CoinDesk figures show.
When explaining this latest activity, analyst Tim Enneking emphasized the key role played by the Federal Open Market Committee (FOMC), which has increased its benchmark federal funds rate by 475 points since March 2022.
This group of 12 policymakers meets early next month, when many expect it to announce another rate hike.
“The entire world (crypto and fiat) is basically on tenterhooks waiting for the May 3 FOMC decision,” said Enneking, managing director of Digital Capital Management.
“Although the correlation between crypto and fiat has generally weakened this year, major events still cause correlation and the pending FOMC decision has halted the upward movement of crypto,” he stated.
“That, plus regulatory uncertainty (the SEC and Bittrex, MICA), banking difficulties (Silvergate, Signature), and contagion fears (banking, commercial real estate) are all conspiring to create a retracement after what, for BTC especially, has been a major move up,” he said, highlighting several headwinds.
Armando Aguilar, an independent cryptocurrency analyst, also highlighted the lack of regulatory clarity, noting that major exchange Coinbase recently applied for a license in Bermuda and may relocate outside the U.S.
He also cited other variables that may have fueled recent market declines, including “Large liquidation orders of BTC in major exchanges, specifically Binance” and the testimony U.S. Securities and Exchange Commission Chair Gary Gensler gave to the House Financial Services Committee earlier this week.
However, several analysts took a different approach to the losses bitcoin suffered over the last few days, describing them as inevitable following the digital currency’s recent price climb.
“For now this is nothing more than a healthy retracement after an overextended move to the upside,” said Scott Melker, a writer, investor and analyst who hosts The Wolf Of All Streets Podcast.
Marc Bernegger, cofounder of crypto fund of funds AltAlpha Digital, also weighed in.
“I personally think that the massive gains in recent weeks made investors take some profits from the table which might have been a trigger for this long squeeze,” which took place recently when downward movement caused many traders to close out their long positions.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and sol.
