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Why Bitcoin’s Drop Below $25K is Imminent: Factors Contributing to the Cryptocurrency’s Continued Decline

by Rishika Mirchandani   ·  May 13, 2023   ·  

The cryptocurrency market experienced a 3.2% loss in the past day, with Bitcoin and Ether, two of the most popular cryptocurrencies, losing 4.5% and 4.3% respectively. Other top altcoins also experienced losses ranging from 4% to 0%. The Cryptocurrency Fear and Greed Index, which measures market sentiment, fell to 49, a neutral level that has not been seen in two months.

Bitcoin is currently trading at $26.3K, which is the lowest level since March 17, and it has lost over 15% from its peak last month. The technical pattern suggests that there is little reason for optimism, as Bitcoin has fallen below its 50-day moving average and the support line of the last two months. Friday’s early morning drop took BTCUSD below the 61.8% Fibonacci correction level from the rally off the March lows, which indicates that the decline is more than just a correction of the latest growth impulse.

Based on current trends, Bitcoin’s return to $25K is a real possibility in the coming days. While the bears may face some oversold conditions, the $25K level is significant, as Bitcoin did not breach it between the middle of last year and the middle of March. It now has every chance of becoming an equally reliable support.

Rating agency S&P Global believes that crypto assets could become a hedge against inflation. However, the hypothesis requires a longer history of the crypto market to prove its effectiveness.

In other news, the New York State legislature is considering a bill that would allow dollar-pegged stablecoins to be used as a legal means of paying bail for defendants. Meanwhile, former SEC official John Reed Stark has called on US financial regulators to ban crypto-related companies from offering Tether (USDT) stablecoins, as he believes the issuer of the USDT stablecoin could be the next domino to fall.

Franklin Templeton, which manages assets worth over $1.4 trillion, plans to launch a second blockchain fund, according to SEC filings. The minimum investment in the fund will be $100K.

Circle, the problem of the USDC stablecoin, that has renounced US Treasury securities maturing after May 31 in case of a US default on government debt. Finally, a meme released by Elon Musk featuring NFTs from the Milady collection resulted in a 2600% increase in sales of anime tokens and hundreds of times price increase of the Milady Meme Coin.

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