The support level of BTC fell from USD 45,000 to USD 40,700, pulling back after two weeks of highs. The price of Bitcoin has maintained a high correlation with Nasdaq’s tech stocks, showing it has matured.
The price of Bitcoin (BTC) has dropped from USD 46,900 to around USD 40,700 over the last week. In that way, it has gone back to the value it had three weeks ago, creating uncertainty about where it will head next.
The behavior of BTC indicates that it did not defend the support at USD 46,000, although bullish traders have bought at that value. Publicly-traded company MicroStrategy, founded and led by Michael Saylor, recently purchased USD 190.5 million worth of BTC.
However, some traders sold to take profits after Bitcoin reached its 2022 high in late March when it traded at USD 47,500. Sales and the non-consolidation of the bullish demand caused the price to drop closer to USD 40,000. That has triggered fear among investors, breaking the calm and neutrality existing in the market earlier last week.
Higher prices have led to weakness in the demand for Bitcoin, which does not help the market grow. Analysts predicted that the market would bid lower if the pullback were significant and support did not return to USD 45,000.
They doubt whether the value will continue to decrease or whether holders and buyers will maintain support above USD 40,000. Market analyst Alex Kuptsikevich recently said that fixing below the current price may open a path to the area close to USD 38,000.
Matt Maley, another market specialist, does not consider liquidation to be worrying, showing that he is more bullish. He explained that the pullback from the high in late March was more technical than anything else.
Maley stated that Bitcoin became very overbought after its 35% rally from January to late March. He said that its multi-month bullish trend would stay intact if it could remain above USD 40,000.
The Price of Bitcoin Correlates with Nasdaq’s Tech Stocks
The situation of Bitcoin is similar to what the shares of technology companies under the NDXT code on Wall Street’s Nasdaq stock exchange reflect. Although Bitcoin distinguishes itself by its volatility, it has behaved like those traditional assets during the last month.
However, the rise in the price of Bitcoin has been higher than Nasdaq’s tech stocks in that period. Despite the current drop, BTC has maintained a growth of 3.83%, while NDXT has risen by 1.05% in the last month.
Market specialist Joanna Ossinger recently stated that expectations of an announcement of higher interest rates by the Fed had affected the demand for risk assets. She clarified that this includes cryptocurrencies and tech stocks, which increasingly move in tandem.
That proves that the government decisions of the United States have influenced the price of BTC significantly. That has happened despite millionaire purchases by companies like MicroStrategy and Terra, which many expected to impact the market more.
Although the correlation with Nasdaq’s tech stocks is a sign that BTC has matured over the years, analysts consider it detrimental to its price. During war conflicts and economic crises with rising global inflation, investors view it as a highly volatile speculative asset.
The invasion of Ukraine by Russia caused the price of gold and oil to grow by around 2% and 16%, respectively. Some analysts have predicted that BTC would have to overcome the current pullback and exceed USD 50,000.
By Alexander Salazar
