Cryptos continue to fall; Bitcoin loses $28,000
By Álvaro Estevez / Alejandra Zamora
Date: Tuesday 09 May 2023
(Sharecast News) - Cryptos post sharper declines and extend Monday's pullback. Bitcoin (BTC) has dropped another 2% in the last 24 hours and falls below $28,000 to the $27,500 level. Meanwhile, Ethereum (ETH) has retreated 1.4% in the last day and is trying to sustain the $1,800 level.
What was true for yesterday seems to be true for today, as the market continues to suffer the effects of the congestion caused by the Bitcoin blockchain as a result of the buying frenzy of meme cryptocurrencies such as Pepe coin (PEPE). This caused Binance, the world's largest cryptocurrency exchange, to be forced to shut down withdrawals with BTC twice in less than 12 hours and ultimately led to the plunge of the reigning cryptocurrency.
"What's going on right now in Bitcoin is quite unprecedented. And we haven't really seen this for many, many years," explained the co-founder and CEO of the crypto investment company 21Co, Hany Rashwan, in an interview granted to 'CoinDesk TV'. The expert stressed that "I wouldn't categorize meme coins in the same league as altcoins like Ethereum or Solana. These altcoins are essentially smart contract platforms that facilitate a range of functions, including but not limited to meme coins and NFTs."
For his part, Paul Eisma, director of trading at XBTO Group, believes that the world's largest cryptocurrency "will be fine in the long run" and that the strength shown since the start of the year is a good indication, especially considering that it is clearly in a growth phase for the technology. ""Like any young and growing, nascent technology that gets upgrades and modifications, this is part of it.This is part of the growth and evolution of the network, and the path is not straight," he added..
Rashwan believes that this situation has been entirely caused by the saturation of the Bitcoin network, something for which he sees a clear way out: for the holders of memecoins to reap profits and move their investment to other more interesting projects in the altcoin sphere. However, the expert warns that it will take another major macroeconomic event for a recovery movement to take place.
In this regard, the April inflation reading in the United States could be defining the next move by the Federal Reserve (Fed). The consensus expects year-over-year growth in the headline inflation rate to remain unchanged from the previous month at 5.0%, with the core rate down slightly to 5.4% from 5.6%.
"If both the U.S. CPI and PPI (producer price index) meet analysts' expectations, we believe this will be very well received by the markets. On the other hand, if inflation proves to be more resilient than estimated, the idea that the Fed should continue to raise interest rates will once again gain strength, which will cause tensions in the bond and equity markets," stated Juan José Fernández-Figares, director of analysis at Link Securities.
From a technical point of view, Javier Molina, senior market analyst at eToro, indicates that Bitcoin "holds the support we indicated of USD 26,500-26,800." From there, the reigning cryptocurrency has staged a "failed attempt" to break above USD 29,000 and has returned to consolidation range. "Losing 26,500 implies going for 25,000. On the upside, we have to break above 29,000 to try to go back to the highs of $31,000," he explained.
In the rest of the altcoins market, the falls in the last 24 hours have ranged from 1% in Cardano (ADA) to 4% in Polygon (MATIC).
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