Bitcoin Crashes To $65,000, Expert Outs Drivers Of Crypto Market Bloodbath

The cryptocurrency market is facing a major downturn, as Bitcoin leads the way back to $65,000 after failing to retest world class of $73,700 was reached in March.

Market expert Michael van de Poppe sheds light on the reasons for the ongoing bloodshed, highlighting several key factors that have contributed to the current market situation.

Crypto Market Battles Uncertainty

An important event highlighted by van de Poppe last Wednesday’s release of Consumer Price Index (CPI) data, which has a major impact on the Federal Reserve’s decision on interest rates.

The data, which came in lower than expected, favored riskier assets. A lower-than-expected headline CPI of 3.3% (vs. 3.4% expected) and a core CPI of 3.4% (vs. 3.5% expected) pointed to a possible cut rate or a positive outlook for future rate cuts, providing favorable market conditions.

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Another important event was the release of Producer Price Index (PPI) data, which provides inflation data from a producer’s perspective. The data revealed a lower-than-expected general PPI score of 2.2% (vs. 2.5%) expected and a Core PPI Y/Y score of 2.3% (vs. 2.4%).

In addition, the monthly data it shows negative statistics, and favors risky assets. However, van de Poppe asserts that despite these positive indicators, the crypto market has continued its downward trend.

According to van de Poppe, the release of consumer sentiment data on Friday also had an impact on the market. Consumer sentiment is considered a market leader and a gauge of market strength or weakness. The data came in lower than expected, with 65.6 points (versus 72.1 expected).

This data showed a lack of economic strength, which may further the bullish sentiments of risky assets and the shift to crypto-native markets.

However, Federal Reserve Chairman Jerome Powell delivered an unexpected hawkish speech. Despite the data pointing to the need for rate cuts and worsening economic conditionsPowell maintained a hawkish tone and hinted at possible rate cuts in 2024.

According to Michael van de Poppe, this idea did not do well in the markets, adding to the uncertainty and the notorious price volatility seen in recent days.

Bitcoin Price Struggle Continues As Bond Yields Decline

The analyst also pointed out that Market indicators, such as Treasury Bond Yields, have decreased. 2 years Treasury Bond Yield fell to its lowest level in two months, while the 10-year yield continued its decline to its lowest level since early April.

These indicators generally suggest favorable conditions for Bitcoin and the asset at risk, which means a high probability of a downgrade. However, the strength of the US Dollar persisted due to the European Central Bank’s (ECB) rate cut.

Van de poppe believes that this unexpected strength of the Dollar, driven by the actions of the ECB, is driving the crisis. market forcessince rate cuts are often necessary for economic stability.

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Overall, the cryptocurrency market, especially Bitcoin, has fallen sharply as it struggles to regain its previous highs. Despite positive economic data pointing to possible rate cuts and market indicators favoring asset risk, the market failed to respond well.

Continued uncertainty surrounding events, such as the listing of the Ethereum ETF, contributed to the market’s weakness. With rate cuts on the horizon and the strength of the Dollar persisting, the coming weeks will likely be crucial in determining the direction of the market.

At the time of writing, Bitcoin was trading at $65,280, down 2% over the past 24 hours and over 5% over the past seven days.

Featured image from DALL-E, chart from TradingView.com