Bitcoin sees a 10% drawdown, what’s behind this market sell-off?

Bitcoin seems to have hit an important price point and has seen a 10% drawdown in the last week on news of China banning crypto trading. While possible, this is unlikely as central banks around the world are considering adopting some form of cryptocurrency. There is also talk that this sell-off may be due to short sellers trying to profit from their bets against Bitcoin’s rise for which there haven’t been enough buyers yet

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Bitcoin has seen a 10% drawdown in the past week. This is what’s behind this market sell-off? Read more in detail here: bitcoin drawdown chart.

The first week of 2022 has gotten off to a shaky start, with Bitcoin falling 10% on Wednesday. Bears lowered the price below $42,500 before ending the daily candle at $43,200, a smidgeon higher.

Bitcoin daily chartBTCUSDT on TradingView.com is the source.

With that, the Fear and Greed Index sank to a new low of 15, marking a 24-week low.

A score of less than 25 indicates a strong fear feeling. While the market has been fluttering in and out of this zone since late Q4 2021, this time around, increased economic uncertainty is a more crucial issue.

Bitcoin and equities have taken a hit.

The discovery of a new covid strain known as IHU in France, as well as the Fed’s announcement of an aggressive anti-inflation strategy, inflicted a hit to crypto and equities.

“As a second constraint on the economy, the Federal Reserve will increase interest rates sooner than anticipated and begin decreasing its total asset holdings.”

The Nasdaq fell 3.3 percent (530 points) to its lowest level since February 2021, putting pressure on U.S. tech firms.

Hani Redha, a portfolio manager at PineBridge Investments, said the imminent possibility of interest rate hikes caused investors to flee speculative technology firms.

Cryptocurrency, which is largely seen as a speculative technology, was also severely impacted. The entire market capitalization on Wednesday was $2.204 trillion. As the day progressed, sellers drove the market cap down to $2.043 trillion, a decrease of 7% in total value.

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Internet Computer, Loopring, and Axie Infinity were the largest losers in the previous 24 hours, each losing roughly -18%. More than half of the top 100 were losing money in the digital realm.

Apart from stablecoins, only Tron-backed APENFT managed to defy the trend by gaining 5% in the previous 24 hours.

Total crypto market capCoinMarketCap.com is the source for this information.

While the WHO downplayed the danger of IHU, markets are likely apprehensive about the possibility of further lockdowns to battle the new strain.

Kazakhstan is in shambles.

Analysts are also blaming the drop in Bitcoin and crypto markets on developments in Kazakhstan.

The cost of liquid petroleum gas has doubled, causing public turmoil in the nation. This has sparked conflicts between anti-government demonstrators and security forces, resulting in the deaths of dozens of people and the injuries of hundreds more.

The government has imposed a national internet blackout in addition to establishing a curfew and prohibiting large gatherings.

“President Kassym-Jomart Tokayev has declared a state of emergency throughout the country, imposing a curfew and prohibiting large gatherings.”

Kazakhstan has surpassed China as the second-largest source of Proof-of-Work mining, owing to China’s anti-crypto attitude.

The Bitcoin hashrate plummeted by 12% after the country’s internet shutdown.

These occurrences, along with Kazakhstan’s problematic energy supply, have sparked discussion over the country’s potential as a major mining centre.

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The “btc bearish” is a term used to describe the market sell-off in Bitcoin. The cryptocurrency has seen a 10% drawdown, which could be due to the recent news of Facebook banning cryptocurrencies from their platform.

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