CoinWorld.com reported:
Bitcoin (BTC), the world’s leading digital asset, has recently experienced a sharp decline. The decline in the price of Bitcoin has affected the entire cryptocurrency market, causing significant losses in the value of other top assets. Companies related to stocks and cryptocurrencies have also felt the pressure.
Bitcoin price prospects weigh on cryptocurrency stocks
Since reaching a historic high of $73,750 seven months ago, Bitcoin has entered the same price channel of stagnation and decline. The last time Bitcoin challenged the $70,000 level was in late July. A few days later, Bitcoin fell to less than $52,000.
At the time of writing this article, the price of BTC is $67,629, a decrease of 1.54% in the past 24 hours. Bitcoin’s recent price trend has a huge difference compared to previous records. In this cycle, BTC rose to a high of $69,499.
The blockchain reaction to the decline in Bitcoin prices is severely impacting cryptocurrency stocks. In the past 24 hours, the prices of cryptocurrency stocks such as Coinbase’s COIN and MicroStrategy’s MSTR have all fallen. COIN’s value has dropped by 4.6%, while MSTR has fallen by 2.4% in just 24 hours.
Other cryptocurrency stocks affected by the decline in Bitcoin prices include Bitfarms, Riot platform, Hut 8 Corp, and Marathon Digital. Bitfarms fell by 2.5%, Riot fell by 4%, HUT fell by 3.2%, and MARA fell by 5%.
Possible reasons for today’s market decline?
According to current market data, the global cryptocurrency market has plummeted by 1.93%, to $2.32 trillion. In the broader market, top assets such as Ethereum (ETH), Cardano (ADA), and BNB have shown moderate prospects. However, an exception is Solana (SOL), which has risen 3.7% to $165, but still below the weekend high of $170.
Potential catalysts in today’s market include a significant increase in interest rates in Western economies. Specifically, the yield on 10-year US government bonds and 10-year German government bonds has risen by 10 basis points.
In general, cryptocurrency prices have been proven to be influenced by the same direction of sentiment from retail stock investors. Typically, when interest rates rise, the cost of capital increases, primarily due to monetary tightening intended to combat inflation.
As a result, risk assets like Bitcoin lose appeal, leading to a decline in value as interest rates continue to rise.
Expectations for catalysts to watch out for – Whales and ETF boost
In the ongoing market trend, important catalysts may determine the future direction of Bitcoin prices. The first is the impact of Bitcoin whale behavior.
On Sunday, October 20th, Whale Alert discovered a dormant whale that made its first transaction in 13.4 years. The reappearance of old Bitcoin whales is a rather pessimistic signal that may occur before a market sell-off.
The logic is that old holders are reappearing to seek returns. Many market participants are concerned that the emergence of more Bitcoin whale addresses may further depress Bitcoin.
The second factor to consider is the performance of the US Bitcoin exchange-traded funds (ETFs). Between October 1st and 17th, Bitcoin ETFs recorded a net inflow of $20.66 billion. The recent surge in fund inflows suggests that Bitcoin remains popular among institutional participants. In this case, if the price of Bitcoin continues to decline, it may return to previous highs or even increase.