Recently, there has been a significant decline in the Bitcoin and altcoin markets. What factors have led to this wave of decline? Here are the key reasons, let's see what impacts there are!👇
1️⃣ Breakthroughs in Google's quantum computing technology
Google's quantum chip Willow has made breakthroughs in the field of computing. If quantum computing is applied to Bitcoin mining, it will threaten Bitcoin's decentralization feature, causing miners to face greater competitive pressure. The market is starting to worry about the future of Bitcoin.🔐
2️⃣ Microsoft refuses to invest in Bitcoin
Microsoft's board voted against the proposal to invest 1% of its assets in Bitcoin. This decision has intensified the market's cautious attitude towards large enterprises investing in cryptocurrencies, impacting investor confidence.💼
3️⃣ Appreciation of the dollar and tightening financial conditions
Since September, long-term bond yields and mortgage rates have risen, the dollar has strengthened, and global money supply has tightened. This has posed greater macro risks for crypto assets represented by Bitcoin. Generally, dollar appreciation is unfavorable for cryptocurrencies.💸
4️⃣ Market sentiment and capital flow
When Bitcoin prices rise, institutions and market makers often conduct capital flows through BTC/altcoin trading pairs, transferring funds to Bitcoin, leading to selling pressure on altcoins.📉
5️⃣ Powell's hawkish remarks
Federal Reserve Chairman Powell recently reiterated that the Fed will continue to raise interest rates and achieve a 2% inflation target in the next 1-2 years. This means that the dollar interest rates will remain high, suppressing the inflow of funds into the crypto market, exacerbating the market decline.💥
6️⃣ Profit-taking sell pressure
As cryptocurrencies like Bitcoin rise, some investors and institutions choose to cash out profits at higher prices, creating sell pressure from profit-taking. This large-scale sell-off has caused a short-term impact on the market, leading to a price drop.💸
7️⃣ Impact of Bitcoin ETF
Although the launch of Bitcoin ETFs has attracted more traditional investors, it has also brought greater market volatility. Due to the risk of liquidity shortages from inflows into Bitcoin ETFs, the market has become more sensitive to Bitcoin price volatility.📈
🌍 In summary, multiple factors such as quantum computing, Microsoft's investment decisions, dollar appreciation, Powell's hawkish remarks, profit-taking sell-offs, and the impact of Bitcoin ETFs have jointly driven the market downward. Investors should remain vigilant, pay attention to global macroeconomic and crypto market dynamics, and act cautiously!📉