BTC recovers the $30K level…is the correction over?
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Answer BTC recovers the $30K level…is the correction over?
Bitcoin led the crypto market to recovery on Friday, and appears to have found a bottom after its latest crash.
Bitcoin is trading 7.5% higher, as the coin reclaimed the $30,000 level after the price dropped to $26,000 on Thursday.
The price of Bitcoin has been deflation since the US Federal Reserve raised interest rates earlier in May.
High market volatility can make Bitcoin and its peers vulnerable to significant swings in either direction.
Currently, the data shows that the sentiment of the cryptocurrency market continues to suffer from severe fear.
The factors behind the Bitcoin crash remain:
The recent decline in Bitcoin was driven by two main factors, concerns about rising inflation, and the Federal Reserve raising interest rates.
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These two factors are still at play and present in the market.
US CPI data earlier this week showed that inflation will take much longer to subside, a sign of weakness for the economy.
To address higher rates, the Fed will likely continue to increase interest rates, reducing liquidity in the market.
Given that much of the bitcoin rally over the past two years has been driven by easy monetary policy, a change in the environment could dramatically alter the flows into the crypto market.
The latest Bitcoin crash came on the back of fears that the Federal Reserve would tighten its policy as the Fed’s decision erased all the gains made during 2021.
Market sentiment is close to record lows:
Despite Bitcoin’s recovery today, market sentiment has slumped near record lows for the day.
With investors still worried after the collapse of the Terra project, any bad news is likely to cause sentiment to drop even more.
Severe market crashes are also usually followed by a short spike called a dead cat bounce, before falling further.
This phenomenon is being observed in the stock markets and is an area that Bitcoin has been tracking closely in the recent period.
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However, a dead cat’s rebound can cause it to rise further.
Currently, US stock futures are up between 0.8% to 1.5%, according to data from CNBC.
Asian stocks also recovered from the recent losses.
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