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 take a look at the influences!
1️⃣ Breakthrough in Google's quantum computing technology
Google's quantum chip Willow has made breakthroughs in the computing field. If quantum computing is applied to Bitcoin mining, it could threaten Bitcoin's decentralization, putting miners under greater competitive pressure, leading the market to worry about Bitcoin's future.
2️⃣ Microsoft's refusal to invest in Bitcoin
Microsoft's board voted against a proposal to invest 1% of its assets in Bitcoin, which has intensified the market's cautious attitude towards large companies investing in cryptocurrencies, diminishing investor confidence.
3️⃣ Dollar appreciation 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 exposed crypto assets represented by Bitcoin to greater macro risks, as generally, a rising dollar is unfavorable for cryptocurrencies.
4️⃣ Market sentiment and capital flow
When Bitcoin prices rise, institutions and market makers often move funds by trading BTC/altcoin pairs, transferring funds into Bitcoin, which puts 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 aims to achieve a 2% inflation target within the next 1-2 years. This means that dollar interest rates will remain high, suppressing capital inflow into the crypto market and exacerbating the market's decline.
6️⃣ Selling pressure from profit-taking
As cryptocurrencies like Bitcoin rise, some investors and institutions choose to take profits at higher prices, creating selling pressure from profit-taking. This large-scale sell-off has caused a short-term shock to the market, leading to a price drop.
7️⃣ Impact of Bitcoin ETFs
The introduction of Bitcoin ETFs, while attracting more traditional investors, has also brought greater market volatility. The risk of insufficient liquidity due to fund inflows into Bitcoin ETFs has made the market more sensitive to Bitcoin price fluctuations.
🌍 In summary, multiple factors including quantum computing, Microsoft's investment decisions, the appreciation of the dollar, Powell's hawkish remarks, profit-taking sell-offs, and the impact of Bitcoin ETFs have collectively driven the market downward. Investors should remain vigilant, pay attention to global macroeconomic trends and the dynamics of the cryptocurrency market, and operate cautiously!
