Bitcoin disconnects from the crypto market, as the price falls below the $19,000 mark to sink to a new low
Bitcoin fell as low as $18,5000 late Tuesday as the native cryptocurrency faced a series of headwinds that have driven it to its lowest price in nearly two years.
The currency rallied slightly on Wednesday morning but remained below $19,000, a key psychological support level that has held since the mid-June lows when the implosion of TerraUSD touched off a broader meltdown in crypto markets.
Bitcoin’s recent price drop also coincides with a decline in performance compared to other crypto assets. This has been reflected in its overall crypto market share – known as Bitcoin Dominance – falling below the 40% mark this week – a level not seen since the first half of 2018.
triggered the collapse of crypto lender Celsius and a large hedge fund called Three Arrows Capital.
The absolute price drop of Bitcoin tells only part of the story: it has also been steadily decoupled from other cryptoassets. In the past week, its share of the total cryptocurrency market, also known as Bitcoin dominance, retreated below 40% – a level not seen since the first half of 2018.
Meanwhile, Bitcoin’s biggest rival Ethereum – whose native token is ETH – has been trading near all-time highs of BTC.
A number of other factors have been bearish on crypto and Bitcoin in particular recently. These include macroeconomic forces, notably statements by Jay Powell at Jackson Hole last week’s decision that the central bank’s chairman decided to maintain a course of rate hikes to curb inflation. This has lifted sentiment in the dollar, which has strengthened against all other fiat currencies such as the euro, as well as their digital rivals.
Meanwhile, there has been negative news specifically related to Bitcoin, including fears that the distribution of coins from the bankrupt Mt. Gox exchange could introduce a new glut to the market.
Then there’s the company Microstrategy, a so-called Bitcoin whale, which has halted purchases in recent months as founder Michael Saylor faces allegations of tax fraud, raising fears the company could shift from a net buyer to a net seller.
Bitcoin miners, who provide the heavy computing power to power the network, are also struggling as high electricity prices eat into their profits – pushing some of them to sell what they mine.
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