The world's biggest cryptocurrency got caught up in a spate of global sell-offs that also affected the stock market.
Bitcoin has managed to break above $36,000 — stemming a painful losing streak that saw prices tumble to lows of $33,184.06 on Monday.
The world's biggest cryptocurrency got caught up in a spate of global sell-offs that also affected the stock market.
While BTC's plunge of 13.55% over the past seven days is nothing to write home about, it got off lightly when compared with major altcoins.
Ether has fallen by a jaw-dropping 24.28% in a single week, with Binance Coin tumbling 22.77% and Cardano hemorrhaging by 33.63%.
On Monday, Bitcoin was in freefall throughout trading hours in the U.S. and Europe, but it managed to buck the trend once Wall Street opened.
At one point, the S&P 500 was pushed into correction territory, but avoided a confirmation thanks to a dramatic turn of fortunes later in the session.
Analysts wasted little time in pointing out how the fates of cryptocurrencies and stocks appear to be entwined right now. Michaël van de Poppe wrote:
"The correlation is insane. The slightest bounce on the S&P 500 and Bitcoin jumps back up."
Worldwide volatility has been fueled by rising geopolitical tensions in Ukraine, and a two-day Federal Reserve meeting due to begin today.
Economists in the U.S. will gather to discuss monetary policy, potentially offering an insight into when interest rates will rise over the coming months.
Although the end of stimulus measures will likely make riskier assets less attractive, experts warn it is crucial for tackling runaway levels of inflation.
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What's Next?
Although Bitcoin has managed to end its losing streak for now, things remain extremely uncertain right now.
At one point, BTC had fallen by more than 50% from the all-time highs of $68,789 set in November 2021 — something of a grim milestone.
Bitcoin's plunge has been disproportionately sharper than those seen in the S&P 500, and this could resume if market sentiment sours once again.
The big test for investors is to be found at $30,000 — a level that hasn't been breached since July 2021.
Those of you with longer memories will recall that BTC slumped from $64,000 in April 2021 to $30,000 three months later, before recovering all of these losses and breaking new records.
The question on everybody's lips now is whether Bitcoin bulls have the fight in them to pull off this feat once again — and whether such a feat is even achievable in the current climate.
Overall, the total market cap of all cryptocurrencies stands at $1.64 trillion right now — about 45% off record highs close to $3 trillion seen last year.
While this latest fall may have been painful, analysts argue that steep drawbacks are ultimately a healthy thing — purging the markets of excess and bringing speculative assets such as Dogecoin back down to Earth.
And although BTC's plunge is eye-watering in dollar terms, dusting off the history books proves this drawback is more modest in percentage terms.
Back in March 2020, at the start of the coronavirus pandemic, Bitcoin fell by a whopping 37% in a single day.
