When it comes to cryptocurrencies, Bitcoin (BTC) can never pass from the conversation. The world's first cryptocurrency never fails to attract investors. Over the past few years, Bitcoin has consistently been ranked as the first cryptocurrency with the highest price and market capitalization. Its value has increased a million times compared to 13 years ago when it was first launched.
However, despite its continuously increasing value, the price of Bitcoin has also continued to experience a correction over the last few months. Before knowing the cause of the correction in the price of Bitcoin, it's good to know in advance what a correction in cryptocurrency is.
What is Correction in Cryptocurrencies?
According to Investopedia, a correction refers to a decrease of 10 percent or more in a security's price from its last peak. Investors tend to overestimate the price of cryptocurrencies.
If this is the case, the market will correct itself when the bulls wear out and it will take some time to recover.
The BTC triangle pattern on the 12-hour time frame has formed, so it is currently on the path of US$40,000 for the first time since September 2021.
When most of the buyers buy the asset and there are very few new buyers supporting the uptrend, exhaustion sets in. Thus, the price will drop when sales orders accumulate and the order book does not get enough purchase entries.
Causes Bitcoin (BTC) Prices Keep Correcting
Corrections often occur as a result of minor events and technical factors. For example, buyers in a market that face intense levels of resistance, low trading volume, and so on. In the case of Bitcoin, there are at least three main factors that make the price continue to correct. Here are some of the causes.
Chinese company Evergrande defaults on debt
In September 2021, the price of Bitcoin (BTC) slid sharply to less than US$1.9 trillion. The same thing happened again at the end of 2021, where Bitcoin was corrected again by 3.75 percent, causing the price to drop to the level of US $ 48,395 per BTC on December 10, 2021.
One of the causes of BitBTC's price correction was the case of Chinese property company Evergrande, which failed to pay its debts. The Chinese property giant's rating was trimmed by Fitch Ratings (an international rating agency) to default or default.
This case has given negative sentiments to the Bitcoin and other crypto currency markets. Although this factor was previously affected by the decline in the value of this crypto number, the latest correction a few days ago is still related to this.
One of those involved is the company Tether, the issuer of the stablecoin USDT, allegedly having assets in the form of Evergrande bonds. Tether later rejected the speculation.
US central bank policy strengthens US dollar
Another cause of the Bitcoin price correction is the focus of investors who are shifting to the direction of the Federal Reserve (The Fed) policy, the United States central bank. Based on the meeting that was held in December 2021, the Fed decided to accelerate the tapering until March 2022, then raise interest rates to prevent rising inflation.
This is considered to have the potential to reduce buying pressure on assets such as stocks and cryptocurrencies, because in the end, the value of the US dollar will increase along with yields on US government bonds.
DXY has the potential to continue strengthening if the golden cross forms in a matter of weeks
This decision finally had a significant impact on investors' considerations in flowing their funds in Bitcoin. Most investors take the attitude of waiting and observing the market response before deciding to trade.
In-depth analysis of the Fed's policy factors towards crypto and the stock market, we have reviewed in this article.
Stablecoin Regulatory Uncertainty
Uncertain stablecoin regulation is also one of the causes of the Bitcoin price correction. This digital currency, which is deliberately designed with a more stable movement than other cryptocurrencies, is considered to have systemic risk by the Financial Stability Oversight Council or the United States financial stability supervisory authority.
This observation leads to the possibility of the establishment of strict regulations regarding stablecoins.
Behind the price that continues to correct, in fact Bitcoin's bullish trend is predicted to continue in the long term. After correcting, the Bitcoin price will increase again, as happened in November 2021 when the Bitcoin price broke its record high, which was above US$68,500.
Bitcoin yields are significantly higher than any other asset class throughout 2021
With the current price, Friday (7/1/2021) at 20:19 WIB, it is in the range of US$42,255, the ratio with the highest price is around 38.49 percent. However, the positive appreciation for this crypto is still good, considering that some observers project it could reach US$100 thousand per BTC in 2022.
A more in-depth projection has just been published by Bloomberg Intelligence. One of them is the forecast that BTC and ETH prices will continue to fall.
However, there are still many things that get in the way of Bitcoin. Despite being billed as the “safest” cryptocurrency, Bitcoin is highly volatile. For those of you who invest in the number one crypto currency in the world, stay cautious and pay attention to market sentiment. To better understand the decline or increase in the value of Bitcoin, you can study technical analysis.
This Bitcoin correction trend can be predicted through technical analysis with the RSI (Relative Strength Index) or Fear and Greed Index indicators.
Bitcoin Price Btc
Bitcoin continues to be under pressure, because death crosses have the potential to appear in the daily time frame.
Currently, based on the 50 and 200 Moving Average indicators, the price of Bitcoin (BTC) tends to form a Death Cross in the daily time frame. Therefore, for re-entry for more optimal results, it is recommended when the Golden Cross is formed.
