Recent fall in the price of bitcoin and digital currencies
Financial market experts believe that the sharp fall in the price of bitcoin and digital currencies has been influenced by three key factors, some of which have intensified in recent days. They expect the downward trend in prices to continue in the coming days and for the short term.
The downward trend in the bitcoin and digital currency markets began on Thursday, following the global stock market, according to Quin Desk. According to the Financial Times, the recent global stock market crash was the biggest weekly drop in a year.
Financial market experts have attributed the recent fall in the price of bitcoin mainly to three key factors, each of which we will examine in the following.
1. Investors' feelings are very negative.
The sharp fall in the price of bitcoin is influenced by the negative feelings of investors and follows the same trend that we have seen in the past few weeks.
"The recent negative news is affecting the objective data related to these assets and reinforcing these negative sentiments," said Jason Deane, an analyst at Quantum Economics.
Religion's outlook for the long-term price trend remains positive. He thinks that this downward trend will continue in the short term and believes that there is still a possibility of increasing downward pressure in the market.
When market fears overwhelm you, it takes time for the situation to change, and you need to watch the traders sell before the situation normalizes.
2. Leveraged trading positions have a long-term impact.
Ben McMillan, the founder of IDX Digital Assets, believes that another factor in the recent fall in prices is traders' overuse of leveraged trading positions; this incident also strengthened the selling pressure on Friday.
This always affects the price of bitcoin. The $40,000 level was significant support that has now turned into resistance, and it is certainly possible that we will see a deeper fall in prices at the beginning of the week (Saturday and Sunday).
3. An intriguing connection between the stock market and bitcoin
- Lucas Outumuro, director of research at analytics firm IntoTheBlock, said that bitcoin and the digital currency market in general act as an asset class in which market fluctuations depend on the feelings of investors.
- That is, their prices fluctuate in parallel with other financial markets, and, more than any other asset class, they suffer from negative investor sentiment.
This correlation has been exacerbated by fears about macroeconomic factors and the poor revenue performance of technology companies during this period.