Bitcoin Price Plummets... "Will Fall Further" vs "Will Rebound"

“Significant Impact of US-Origin Employment Shock”

Bitcoin has weakly collapsed amid fears of a U.S. economic recession, plunging more than 18% in a week and fluctuating around the $53,000 level. On the 5th, cryptocurrency prices including Bitcoin were displayed on the Upbit Lounge pad in Gangnam-gu, Seoul. Photo by Jo Yongjun jun21@

Due to concerns over a U.S. economic recession, the price of the cryptocurrency Bitcoin also dropped significantly.

According to Google Finance on the 5th (local time), the price of one Bitcoin briefly plunged to $49,443, falling below $50,000 for the first time in about six months since February. Afterward, buying interest emerged due to the excessive drop, causing the price to fluctuate around $55,000.

The price of Bitcoin fell about 30% within a week after surpassing the $70,000 mark on the 29th of last month, when the "Trump asset effect" was maximized.

The price of Ethereum, the second-largest cryptocurrency by market capitalization, dropped even more sharply. On the same day, the price of one Ethereum fell to as low as $2,180, the lowest price in about eight months since December last year. Since then, Ethereum has been trading around $2,400, partially recovering from the decline.

Ruslan Lienka, Chief Market Officer at cryptocurrency financial services firm YouHodler, analyzed that the recent decline in cryptocurrencies was driven by macroeconomic factors such as uncertainty over a soft landing following the U.S. employment data shock, concerns over escalation in the Middle East, and the rise of AI bubble theories.

There are also observations that the sharp rise in the yen's value due to the Bank of Japan's interest rate hike, which led to the liquidation of yen carry trades, affected the cryptocurrency market. Yen carry trade refers to leveraging investments in high-yield markets using low-interest yen.

Some point out that this short-term plunge is reminiscent of the early days of the COVID-19 pandemic. Daniel Chung, CEO of cryptocurrency investment firm Pangea Fund Management, described the recent rapid decline in cryptocurrencies as "a speed reminiscent of the 2020 crash triggered after COVID-19."

David Morrison, Senior Market Analyst at TradeNation, stated that if Bitcoin's price fails to maintain above $50,000, it could fall to $40,000. Marcus Tillein, founder of 10X Research, forecasted, "If the current economic weakness worsens into a recession, Bitcoin could drop to $42,000."

Some also see the sharp drop on this day as a buying opportunity. Alex Sohn, Head of Research at Galaxy, said, "This decline feels brutal, but such drops were commonly seen even in previous bull markets."

Will McDonough, founder of Corestone Capital, predicted that Bitcoin could recover to around $70,000 as the U.S. presidential election in November approaches, reasoning that market participants expect the new government to take a more favorable stance toward Bitcoin.

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