Why is Bitcoin Crashing? 3 Reasons Why BTC Is Heading For $10,000
Crypto tycoon Mike Novogratz predicted in early January that 2022 will be a difficult year for cryptocurrency investors. “This will be a year where people realize being an investor is a hard job,” he tweeted. Novogratz’s prediction proved accurate as markets failed to rally and Bitcoin fell from $36,000 to $16,000 from January to November.
Bitcoin threw away all its 2021 gains and is now trading at its lowest level in November 2020. Several analysts claim that BTC trading at $16,000 is expensive and the king crypt is headed for $10,000 next.
In this article, we will highlight why Bitcoin is crashing and why it could be headed for $10,000 in the next leg.
3 Reasons Bitcoin Could Fall to $10,000
1. Global macroeconomics
Inflation is among the main reasons why both the stock and crypto markets are on the back foot in 2022. The rising costs of daily consumer goods are not keeping pace with wages, which leads to the highest inflation since 1982. In addition, leading companies are cutting staff to stay afloat afloat in the ongoing and tough bear markets.
The Feds raised interest rates to tame inflation, but the average person borrowing money has become unaffordable. The development leads to less spending and concentrated borrowing as the free cash flow is drained from the markets.
In addition, the war between Russia and Ukraine is ongoing with billions of dollars spent on destabilizing the global markets.
Also read: Texas Governor Greg Abbott addresses how Bitcoin is good for the state’s power grid
2. The FTX crisis
Just as the crypto markets were improving after the TerraUST and Luna collapses, the FTX crisis started. Touted to be the future of crypto, Sam Bankman-Fried fell from grace for all financial misdeeds. FTX filed for bankruptcy and previously halted withdrawals from the exchange, sending investors into a frenzy.
The damage has been done, and undoing it for whatever reason by raising funds will not solve the crisis immediately. Bitcoin, which traded at $20,000 before the crisis fell to $15,000 levels and could slide further in the coming weeks.
Also read: First FTX bankruptcy hearing reveals missing assets and more charges
3. Negative emotions and fear creep in
Investors are showing no positive sentiment as the markets and Bitcoin are in a continuous decline for 11 straight months. The Bitcoin ‘fear and greed index’ has reached extreme fear, suggesting that investors are planning to stay away from the markets.
All these factors add pressure to Bitcoin’s price and shake its position at $16,000 levels. Another drop could send BTC spiraling downward to new yearly lows and wreak havoc in the coming weeks.
At press time, Bitcoin was trading at $16,214 and is down 2.2% in 24-hour trading. BTC is also down 76.5% from its all-time high of $69,044, which it reached in November 2021.
