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Three Reasons Behind Bitcoin’s Sharp Decline Named
As the first reason, experts cited weak financial reports from tech giant companies. The results of the so-called “Magnificent Seven,” and especially Microsoft, disappointed investors and cast doubt on the sustainability of expectations for growth in the artificial intelligence market, which had previously supported demand for risk assets.
The second trigger was the nomination of financier Kevin Warsh as the head of the U.S. Federal Reserve (Fed). The crypto market initially perceived this news as a signal of possible policy tightening by the main U.S. financial regulator, which increased pressure on cryptocurrencies and other high-risk assets.
The third factor analysts pointed to was the sharp decline in the value of precious metals. The drop in gold and silver triggered a wave of position closures by traders, affecting a wide range of assets, including digital currencies.
Wintermute noted the formation of a full-fledged bearish trend: digital assets are showing noticeably weaker performance compared to traditional ones. At the same time, the current crisis differs from previous cycles. Its causes lie in economic processes and the natural reduction of debt burdens, rather than in the collapse of major players such as the FTX crypto exchange, Wintermute analysts explained.
Experts believe that the market infrastructure has become more resilient in recent years, and the interest of large corporations in cryptocurrencies has not disappeared but has shifted into a waiting phase. According to their assessment, Bitcoin is currently in a “price discovery” stage, and market recovery may be possible in the second half of the year when U.S. Fed policy becomes clearer.
Earlier, economist and founder and CEO of Real Vision Raoul Pal stated that the main reason for the Bitcoin market decline is the lack of capital available for cryptocurrencies within the U.S. economy, and that the crypto industry itself is not to blame.
See also: "Assets of U.S. Bitcoin ETFs Fell to $100 Billion"
