Tech

Bitcoin Price Plunges Back to $35,000, All Markets Crash

The price of Bitcoin is falling again. As the stock markets record catastrophic performances, the queen of cryptocurrencies has plunged back around $35,000. Observers believe that the economic situation, marked by inflation, is close to recession.

bitcoin crash course

A few days ago, the US Federal Reserve raised its main interest rate by half a point, its largest increase since the 2000s. This rise in rates was more tentative than expected. The organization wishes at all costs to avoid a recession.

This announcement was greeted with relief by the financial markets. Most observers were indeed expecting more aggressive measures to contain inflation. As a result, most stock indexes have started to rise again. Still highly correlated to traditional markets, Bitcoin got back on track for $40,000, raising hopes for a new bullish phase.

Why did the price of Bitcoin suddenly collapse?

Unfortunately, the relief was short-lived. On the evening of Thursday May 5, 2022, Bitcoin price plunges back to $35,571, at the bottom of its range. On Twitter, many analysts believe that BTC has entered a bearish phase. Michaël van de Poppe, independent market analyst, assures that Bitcoin will not show any signs of rising until the price re-establishes itself above $37,500.

Despite its nascent status as a safe haven, Bitcoin has once again reacted stock market movements. The New York Stock Exchange has indeed signed its worst session since 2020, and the crash caused by the Covid-19 pandemic. Based primarily on technology stocks, the Nasdaq recorded the third largest loss in its history.

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This brutal collapse of the indices is essentially due to the Federal Reserve’s announcement. Investors reacted with a delay of several hours to the measures of the American central bank. “The fact (that the US central bank) has ruled out a 0.75 percentage point hike hasn’t really changed the fact that the economy is slowing and the Fed is going to tighten monetary policy at a high pace”, explains Angelo Kourkafas, Wall Street analyst. Maris Ogg, another financial expert, believes that shareholders “started to think a little more about the Fed and its communication and realized things weren’t going to get better”.

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