Bitcoin Drops Below $40,000

Bitcoin tumbled 6% during the afternoon of this Monday, to 39,774 dollars. This year promises to be challenging for the “cryptoqueen” that faces a more “hawkish” monetary policy from central banks.

Bitcoin tumbled 6% to $39,774 early Monday afternoon, having in the meantime slowed losses. In the past seven days, the cryptoqueen has already sunk about 13%, the worst annual start ever, according to data compiled by the Bloomberg Galaxy Crypto Index.

The main cryptocurrencies in a market filled with over 15,000 cryptoassets have followed this negative trend. In the last week, ethereum has sunk about 21% to $3,008.01, while solana is down 4% to $132.44.

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Looking ahead, analysts estimate that the most quoted cryptocurrency on the market, as well as other altcoins, will remain under pressure.

“Cryptocurrencies are likely to remain under pressure as the US Federal Reserve (Fed) scales back its liquidity injections,” commented Jay Hatfield, CEO of Infrastructure Capital Advisors, speaking to Bloomberg.

The executive even predicts the possibility that “bitcoin will end the year below 22 thousand dollars”. A forecast that is not accompanied by Bloomberg’s outlook for this year on the crypto-assets market, which, even counting a tight monetary policy in the US, estimates that “the support line for bitcoin is centered at 40 thousand dollars and the resistance line in the 100 thousand dollars”.

Noelle Acheson, responsible for market analysis at Genesis Global, recalls that “a tighter policy by the Fed affects not only interest rates, but also high-risk investments, such as cryptocurrencies”.

Last week, there was yet another sign that the Fed might act more aggressively if inflation remains high. Indeed, the minutes of the last meeting of the US Federal Reserve revealed that members of the central bank put the possibility of starting to raise the interest rates earlier than expected and in a faster way. The first increase may even be in March.

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Summary

Bitcoin tumbled 6% during the afternoon of this Monday, to 39,774 dollars. This year promises to be challenging for the "cryptoqueen" that faces a more "hawkish" monetary policy from central banks.

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