Bitcoin Falls Below $50,000... Is the Year-End Rally Out of Reach?

Omicron and Early Tapering End
Evergrande Credit Downgrade... Consecutive Adverse Factors
Psychological Support Level Breached

[Image source=AP Yonhap News]

[Asia Economy Reporter Kwon Jaehee] There was no Bitcoin rally even during the year-end, which is considered the peak season for cryptocurrencies. Bitcoin fell below the psychological support level of $50,000 once again. Following the Omicron variant, early tapering termination, and the Evergrande Group credit rating downgrade, a series of negative factors caused Bitcoin prices to collapse weakly.

According to CoinMarketCap, a global cryptocurrency market tracking site, on the 9th (local time), Bitcoin recorded $47,578.72 at intraday (as of 5:58 AM KST on the 10th), down 6.19% from 24 hours earlier. This marked a decline after five trading days, with Bitcoin falling below the psychological support level of $50,000 again.

Kate Faddis, President and Chief Investment Officer (CIO) of Grayscale Capital, said in an interview with Bloomberg, "The problem with cryptocurrencies is who will catch the falling knife," adding, "The current cryptocurrency market reminds me of 2008 when the real estate bubble burst, and this is speculative investment."

Bitcoin's fall below $50,000 again is interpreted as being due to the Evergrande crisis and the possibility of early tapering termination by the U.S. Federal Reserve (Fed). The day before, global credit rating agency Fitch downgraded the credit rating of China's real estate developer Evergrande Group from C to RD (Restricted Default).

CoinDesk analyzed, "The downgrade of Evergrande Group's credit rating by Fitch sparked concerns about a shock to the international financial market, which led the Bitcoin downtrend."

There is also an interpretation that this movement came as central banks around the world, including the Fed, announced tightening monetary policies due to soaring inflation. Bloomberg News diagnosed, "The soaring volatility of cryptocurrencies occurred as central banks announced they would reduce liquidity headwinds through tightening monetary policies."

However, some still bet on positive prospects for cryptocurrencies.

Mike McGlone, Senior Analyst at Bloomberg Intelligence, mentioned, "In a situation where digital assets are gradually evolving, Bitcoin is expected to reach $100,000 next year."

This content was produced with the assistance of AI translation services.