Why hasn’t the Bitcoin price risen again yet?

Bitcoin price has recovered somewhat after days of disastrous decline. However, the uptrend did not last long, the currency failed to revisit the important $40,000/dong milestone.

According to CoinMarketCap data on Feb. 3 (Vietnamese time), bitcoin price plunged 3.6% compared to the previous 24 hours $37,398/Copper. On February 1st, the price had time to break the threshold 40,000 won U.S. dollar/Copper.

Bitcoin’s rally started last week, but so far the price of Bitcoin has failed to return to the mark 40,000 won U.S. dollar/Copper. That might disappoint some investors,” financial expert Craig Erlam (based in London) tells us.

Bitcoin price has fluctuated wildly in the last 7 days. Photo: CoinMarketCap.

Not back yet 40,000 won U.S. dollar

According to Mr. Erlam, investors’ risk appetite is improving. “Of course, this supports Bitcoin’s price momentum. Thanks to this, Bitcoin can return to the price level 40,000 won U.S. dollar/dong as long as the uptrend continues,” according to the expert forecast.

“But some investors are taking profits. This resulted in a 4% drop today,” explained Mr. Erlam.

Bitcoin’s market cap is shrinking 708 billion dollars. Compared to the summit 68,789 U.S. dollar/dong was founded on 11/10/2021, bitcoin price fell by 45.62%.

The total cryptocurrency market cap also plummeted by 2.88% 1,730 billion dollars. Ether – the second largest cryptocurrency in the world – saw its price drop nearly 4% 2,676 U.S. dollar/Copper. However, compared to the previous week, the coin is still up 2.54%.

Bitcoin price falls nearly 4% as some investors take profits. Photo: CoinMarketCap.

Bitcoin price’s steep decline began on Jan. 21 after the price plunged from the daily high 43,300 U.S. dollar/dong further down 38,000 won U.S. dollar/dong, causing the market cap value to lose the milestone 800 billion dollars, 700 billion dollars.

On January 24, the price sometimes fell to the level of 33,500 won U.S. dollar/dong, marking a 6-month low.

Bitcoin’s price fell sharply in line with the momentum of other risky assets like tech stocks. The reason for this is that investors are concerned that the US Federal Reserve (Fed) will raise interest rates sharply in order to control inflation.

According to Edward Moya, a finance expert at consultancy Oanda (based in the US), investors are concerned that the Fed could tighten monetary and fiscal policy drastically this year.

“The Fed made a mistake on inflation. Their rush to raise interest rates to prevent prices from rising could put a lot of pressure on risky assets. These asset classes posted strong gains in the last quarter of the year Moya.

Depends on Fed decision

Some proponents argue that bitcoin is a form of “digital gold” that benefits when the economy and markets fluctuate. But in recent months, Bitcoin has traded as a risk asset.

“Bitcoin continues to be traded as a risk asset. The currency could benefit as central banks hesitate to tighten monetary policy,” commented Oanda’s Mr Moya.

According to the expert, interest rate decisions by the Bank of England (BoE) and the European Central Bank (ECB) can hit Wall Street harder than usual. Investors are looking for signs of risk-taking.

Meanwhile, Fed officials also want to raise interest rates without doing too much damage to the economy.

Observers believe the Fed will develop a slow and methodical plan to deal with the escalating price situation. Aggressive rate hikes could hurt the economy and shake financial markets.

According to fund manager Bill Ackman, if the Fed hikes rates by 0.5 percentage points, the agency will “bring shock and terror to the market.”

Most Wall Street bankers believe that with small rate hikes, the Fed will find ways to ease inflationary pressures. Goldman Sachs forecasts that the Fed will raise interest rates four times this year (March, June, September and December) and has started reducing total assets since July.

Mr. Jamie Dimon – CEO of JPMorgan Chase – predicted that the Federal Reserve will raise interest rates “more than 4 times this year”, even as high as 6.7 times. The fact that the Fed is not suddenly raising rates could help risky assets, including tech stocks and cryptocurrencies, to recover.

“When the bitcoin price breaks through 40,000 won U.S. dollar/dong can be bought by some investors and thus increase the further momentum of Bitcoin,” commented financial expert Moya.

“But it seems it’s too early for Bitcoin’s price to hit the mark 40,000 won U.S. dollar/Copper. In the coming week, the price may fluctuate in the 30,000 range.40,000 won U.S. dollar/dong,” he predicted.

According to the expert, Bitcoin price continues to be influenced by fluctuations in the stock market. Next week’s inflation report could also hit the crypto market hard.

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