Cryptocurrency prices have had a difficult performance in the past few weeks as the recent surge faded. Bitcoin has crashed from the year-to-date high of over $73,000 to about $65,000 today while Solana, Arweave, Bittensor, and other altcoins have plunged by double digits in the past 30 days.
Solana has crashed from the year-to-date high of $210 to about $150 today while Arweave has plunged from $47 to $28. Bittensor’s TAO has retreated from over $775 to below $600.
Bitcoin has formed a triple top
Altcoin prices are usually affected by the performance of Bitcoin. In all cases, altcoins like Solana, Arweave, Bittensor, and Avalanche tend to react to rise when Bitcoin rises and crash when it retreats.
This performamce explains why most altcoins have crashed lately since Bitcoin is down by over 11% from its highest point this year. It has moved into a deep correction, which is defined as a period when an asset pulls back by 10% from its recent high.
There are signs that Bitcoin will continue retreating in the coming weeks. The most clear sign of this is that the coin has formed a triple-top pattern around the $72,000 level. This pattern forms when an asset fails to blast above a crucial resistance level at least three times. As shown below, Bitcoin has failed to cross this level several times since March.
Sell the news
Fundamentally, there are other reasons why the price of Bitcoin could continue falling in the coming weeks. First, Bitcoin halving will happen in the next few days. While this is a good news for the coin, the reality is that it has already been priced in by market participants. This explains why BTC has jumped from below $20,000 in 2022 to over $65,000 today.
Therefore, there is a likelihood that the price will pull back when this halving happens. We have seen this price action happen before, For example, Litecoin price jumped to $116.18 before its halving in August last year and then crashed to $56 in the same month.
Most recently, Bitcoin Cash price rose to over $720 before its halving event and then crashed to $450 after it happened.
Second, a risk-off sentiment is happening in the financial market because of the Federal Reserve. Recent data showed that the US inflation has remained above 3.5% while the labor market is extremely strong. Therefore, there is a likelihood that the Federal Reserve will hold rates steady or even hike this year.
The change of tune by the Fed explains why other assets have dipped lately. Nvidia, one of the most popular stocks in Wall Street has moved into a deep correction. The Dow Jones erased over 450 points on Friday.
Third, there are signs that inflows into spot Bitcoin ETFs is slowing as outflow from Grayscale Bitcoin Trust (GBTC) increase. GBTC now has over $21 billion in assets, down from a peak of $30 billion.
Therefore, the outlook for altcoins like Solana, Bittensor, and Arweave is moderately bearish for now. In the long term, however, there is a likelihood that the prices will bounce back as analysts expect that Bitcoin will still hit $100k someday.
Contributors
