PETIK.NET - The turbulence in the crypto market has recently intensified, as Bitcoin (BTC) plunged below $28,000, marking a drop of more than 9% from the previous 90-day high of $31,005 on April 14.
As of April 20, BTC was hovering around $28,044, leaving investors and traders to ponder the factors that led to this drop.
Amid this price drop, Bitcoin mining difficulty has soared to a historic high, creating an interesting contrast and worthy of further exploration.
Factors Behind BTC Drop
Disappointing first-quarter earnings in equity markets, including Tesla's, have impacted various sectors, causing the S&P 500 and Nasdaq Composite to fall 0.6% and 0.8%, respectively.
Analysts lowered Q1 EPS estimates for companies in the S&P/TSX Composite by 8.9% from Dec. 31 to Mar. 31, which was the largest quarterly decline since Q2 2020. #earnings, https://t.co/rZraZqKzVi pic.twitter.com/1kJNtOziUw< /a>
— FactSet (@FactSet) April 20, 2023
Due to its interrelated nature, poor first quarter earnings in equity stocks could trigger a free fall in Bitcoin prices.
A downturn in traditional markets may make investors more inclined to be risk averse, impacting the demand for cryptocurrencies.
The domino effect and the correlation between stock and crypto prices can reduce the value of Bitcoin.
Reasons for shorts:
– supply > demand, due to bad macros (high rate)
– competition heating up, demand in pressure
– price cuts, margin pressure
– FSD did not come to fruition
– Elon sells more for his venture
– market sell off due to earnings decline and recession pic.twitter.com/xyZGQRNijS— Mike (@Szwalking) April 17, 2023
In addition, investors who suffer losses may sell their BTC assets, which could exacerbate the downturn.
With less income to invest in riskier assets, reduced capital flows could amplify downward pressure on the Bitcoin price.
As a result, investors are taking a more pessimistic view of Bitcoin's near-term price, with a surge in demand for short-term downside protection.
Mining Difficulty and Highest Hash Rate
Despite the bear market sentiment, Bitcoin mining difficulty has risen by 1.72% to a record high of 48.3T.
Disclaimer: Every investment decision is in the hands of the reader. Study and analyze before buying and selling Crypto. Petik.net is not responsible for profits and losses arising from investment decisions.
The information provided in this article is for informational purposes only and should not be considered as financial or investment advice. Cryptocurrency investments are subject to market risks, and readers should exercise caution and do their due diligence.