- Bitcoin is trading around $82,500 on Wednesday, having rebounded by 5.52% from the prior day.
- A report from K33 points to significant sell-offs in both equity and crypto markets, spurred by escalating worries over a fragile global economy.
- Market participants should exercise caution as forthcoming US macroeconomic data could introduce further volatility in high-risk assets such as Bitcoin.
The price of Bitcoin (BTC) is currently around $82,500 on Wednesday after a recovery of 5.52% from the previous day. A report indicates that both equity and cryptocurrency markets are experiencing substantial sell-offs due to heightened concerns regarding a vulnerable global economy. Traders are advised to be wary, as upcoming US macro data releases may result in increased volatility for speculative assets like Bitcoin.
Crypto markets face significant sell-offs amid heightened global economic anxieties
The recent report reveals that equity and crypto markets have been adversely affected by large-scale sell-offs as fears about a fragile global economy grow.
Rising recession fears, a commitment from US leadership to lower 10-year bond yields, and the initial signs of an escalating trade conflict have caused the S&P 500 and Nasdaq to plummet to levels not seen since mid-September. Likewise, Bitcoin hit new yearly lows, dropping to $76,555 and reporting a weekly performance of -5%.
While many factors attributed to current market unease, the report notes that some recent measures from the administration have helped bolster confidence in the crypto space, including the establishment of a crypto working group and the launch of a US Bitcoin reserve last week. This context frames BTC’s relative outperformance compared to equity indices since the elections.
Data indicates that BTC has performed 13% better since the election, surpassing other asset classes, although it has faced a decline of 25% since the inauguration, placing it as the second worst-performing asset, just ahead of Ethereum, which has seen a decline of 46%.
Major asset returns: Since election vs. inauguration chart.
“We fundamentally disagree with analysts who link the recent decline to a lackluster US reserve,” states an analyst.
The analyst further explains, “This reserve represents a pivotal moment for Bitcoin. The government’s commitment to hold seized assets and potentially acquire more BTC openly supports Bitcoin’s role as a global store of value, indicating a significant separation from its recent market-driven performance. Although global market uncertainties may require time to resolve, we see current price levels and the foreseeable future as a strong opportunity to buy and hold BTC for the long term.”
In an exclusive discussion, an expert highlighted that Bitcoin’s drop, despite supportive regulations and increasing BTC reserves, is largely influenced by macroeconomic factors, particularly tariff disputes among major nations. This situation has driven a pivot toward liquidity, with investors taking profits and adopting a more cautious approach.
He foresees ongoing volatility, pointing to the $70,000 support threshold while cautioning that the prevailing bearish sentiment may allow for additional declines.
Upcoming FOMC meeting may lead to heightened Bitcoin price volatility
Traders and investors are closely monitoring the US macroeconomic data releases – specifically the Consumer Price Index (CPI) on Wednesday and the Producer Price Index (PPI) on Thursday – which could significantly impact risky assets like Bitcoin and influence the trajectory of equities and digital assets ahead of the Federal Reserve’s interest rate meeting on March 19.
An analyst stated that the FOMC meeting is likely to result in the Federal Reserve maintaining rates at 4.25%-4.50%, adopting a neutral-to-cautious stance.
Nevertheless, a more hawkish approach could manifest if inflation worries resurface. In such a case, crypto prices, including Bitcoin, could stagnate or decline from their current range of $83,000-$76,000, especially if a hawkish outcome strengthens the US Dollar and yields, putting pressure on risk assets.
“Even an unexpected dovish surprise, like a rate cut, may not be enough to trigger a sustained rally due to potential market skepticism and overarching macro uncertainties. Concurrently, the conclusion of quantitative tightening offers only limited support,” he added.
Bitcoin Price Outlook: RSI showing signs of recovery
Bitcoin’s price fell below the 200-day EMA at $85,664 on Sunday and dropped by 9.14% until the following day. However, BTC found support near the $76,600 level and rebounded by 5.52% on Tuesday. As of writing this, it sits at approximately $82,500.
Should BTC continue to decline and close below $78,258 (February 28’s low), it could lead to a further drop toward its next support level of $73,072.
The Relative Strength Index (RSI) on the daily chart is currently at 39, trending upward after bouncing off 30 on Monday, suggesting a reduction in bearish momentum and a possible transition from oversold territory. However, for the recovery rally to continue, the RSI must surpass its neutral level of 50.
BTC/USDT daily chart
If bullish momentum builds, BTC may extend its recovery towards $85,000.
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market cap, designed as a form of money. It operates without a central authority, removing the need for third-party intervention in transactions.
Altcoins refer to any cryptocurrency other than Bitcoin. Some consider Ethereum as a non-altcoin due to its forking relationship with Bitcoin. If this is accepted, then Litecoin would be recognized as the first altcoin, created by forking from Bitcoin’s protocol.
Stablecoins are cryptocurrencies that aim to maintain a stable value, backed by reserves of the asset they represent. Their value is typically pegged to a commodity or financial instrument, like the US Dollar, with supply regulated through algorithms or market demand. The aim of stablecoins is to facilitate trading for investors and offer a safe store of value amid cryptocurrency volatility.
Bitcoin dominance is the proportion of Bitcoin’s market capitalization relative to the total market capitalization of all cryptocurrencies. It serves as an indicator of investor interest in Bitcoin. Higher Bitcoin dominance often occurs before and during bullish trends, as investors tend to gravitate towards more stable, high-cap assets like Bitcoin. Conversely, a drop in Bitcoin dominance can signal a shift toward altcoins as investors pursue higher yields, often triggering surges in altcoin prices.