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Tuesday, May 28, 2024

What Drives Bitcoin’s Price Down, How Low Can it Go as BTC Heads Toward $60K?

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Bitcoin’s price has been on a downright spiral for the past several days, losing way more than ten grand after charting a new all-time high last week at nearly $74,000.

Although many experts warned that such a correction could arrive and forecasted a ‘healthy’ 20% retracement before another leg up, the community wonders how low it can go, so we decided to ask the popular ChatGPT rival – Perplexity – whether there is even more pain in the asset’s future.

BTC’s Downfall

The primary cryptocurrency had a strong start to this year, which intensified after the first month of trading for the January-launched 11 spot Bitcoin ETFs in the States. As the demand for those products skyrocketed and the inflows charted new records, BTC’s price went on a roll and gained more than 60% since the start of 2024 at one point. This culminated last week when the cryptocurrency soared to $73,800 to chart a new all-time high.

However, the landscape started to change at this point, and many analysts warned that there would be an inevitable correction before Bitcoin could continue climbing. This has indeed been the case since last Thursday, as the asset plummeted to $65,000 during the weekend and even more in the first days of the new business week.

In fact, Bitcoin marked a 15-day low earlier this morning at under $61,000 before recovering some ground. This means that the asset had declined by roughly 20% since its peak in less than a week.

BTCUSD. Source: TradingView

According to Perplexity, it’s difficult to determine what would be Bitcoin’s low during this retracement, because its price is influenced by several factors, such as…

The Factors

The popular AI chatbot believes one of the key reasons why BTC has been freefalling is profit-taking by investors and miners who had been waiting for the asset for years to return to its 2021 levels. Also, there are some new ones who entered when BTC stood below $30,000 and have now seen their funds more than double in less than a year.

Additionally, Perplexity outlined another factor that could be driving uncertainty in all financial markets, but especially in the more volatile and risky by nature – crypto. The Federal Reserve is set to meet later today in its second FOMC meeting for the year, which could lead to major changes in the central bank’s monetary policy. In general, such changes have indeed impacted BTC’s price movements in the past.

Nevertheless, most experts believe the Fed will not raise the interest rates anymore as it has refused to do in the past few such meetings.

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