Bitcoin at nearly two-month low with price eyeing $36,000
By Noemi Jansana / Alejandra Zamora
Date: Wednesday 27 Apr 2022
(Sharecast News) - The support due to the positive news that certified the fundamentals of the cryptocurrency market´s positive aspects or the purchase of Twitter by Elon Musk were not able to withstand the new wave of risk aversion that hit Wall Street on Tuesday. The Nasdaq led the decline in all indexes and investors in digital assets were carried away by the selling momentum, leaving a back and forth movement in Bitcoin, Ethereum and even Dogecoin.
"Bitcoin retreated as risk aversion returned to Wall Street, with tech stocks leading the decline," commented Edward Moya, analyst at Oanda. "Russia's suspension of gas supplies to Poland sent risk assets, including cryptocurrencies, sharply lower."
Earnings season is also leaving a bittersweet taste. The disappointment of Alphabet, which earned 8% less, contrasts with Microsoft, as it met expectations. Another stock that suffered on April 26th was Tesla, which lost 12% following its CEO's agreement to buy Twitter for $44 billion. Experts pointed out that its shareholders did not like Musk's use of the company's shares as collateral for the acquisition of the microblogging social network.
This series of news sent doses of volatility to the market as not seen for months. Bitcoin ended up closing at a new seven-week low of $37,884 after managing to reverse recent losses over the weekend and on Monday (according to CoinMarketCap data). However, the pullback from Musk and Twitter managed to lift its price to the all-important $40,000 mark that it was unable to hold and is now clinging to $38,500, with its sights set on $36,500. Ethereum performed similarly and staged a back and forth move from $2,800 to $3,000.
The falls on Wednesday are around 5% for the two main coins of the market, as well as Ripple, Terra, Cardano or Avalanche. As for Dogecoin, it soared 26% on Monday after the news broke and accelerated its performance to rises of 30% on Tuesday, and then cut back its gains to end below $0.14. Technical analysis of the 'cryptomeme', however, indicates that the bullish signal it left between Monday and Tuesday has not been invalidated "as long as $0.13 is respected," stated analyst Ali Martinez, whose price target is at $0.24. The total market capitalization saw $100 billion blown away in 24 hours and now stands at $1.77 trillion.
POSITIVE NEWS IS NOT CONVINCING
This behavior indicates that investors ignored other positive developments in the market in recent days.
On Monday, the Bitcoin Mining Council released a report highlighting that mining efficiency increased 63% year-on-year, with sustainable energy use at 58%, marking the fourth consecutive quarter above 50%. The grid also used 25% less energy each year. "These improvements are attractive to institutions that see environmental impact as one of the main reasons not to invest in Bitcoin," noted Marcus Sotiriou, analyst at GlobalBlock.
Fidelity advanced its support for widespread adoption as well, by allowing investors to add Bitcoins into their 401(k)s. "Fidelity is the first major retirement plan provider to do this, and I think it sends an important message to pension providers: no one wants to be first, but no one wants to be last," commented Sotiriou.
As for the Twitter deal, the broader market is hopeful that it is the start of the next upward momentum. However, the price seems to contradict the expert consensus as, for now, "it is not clear what Musk will do differently or how he will address the problem of scam boots damaging the reputation of cryptos," the GlobalBlock analyst concluded.
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