At press time, Bitcoin is under immense selling pressure, recently plunging below the $40k level and grossly underperforming a resurgent greenback.

Several fundamental factors are catalyzing the sell-off, primarily based on monetary policy developments in the U.S. After months of artificially propping the economy and printing trillions of dollars to cushion its citizens against the ravaging effects of the COVID-19 pandemic, the FED Reserve has announced steps that will see the central bank slow down on bond purchases as they turned hawkish.

Besides tapering, the FED’s chair, Jerome Powell, last year said interest rates would rise gradually in 2022, marking an end of free helicopter money which seeped into the crypto market. While the crypto trading community remains confident, expecting a recovery, monetary policy shifts could have severe repercussions for the BTC market, preventing sharp gains above $40k—a psychological resistance level.

For the possible “doom” of Bitcoin, Nouriel Roubini, a Nobel laureate, has increased his criticism on El Salvador President Nayib Bukele, arguing that the latter deserved to be impeached for “bankrupting” the country with his Bitcoin gamble. Moody’s cut El Salvador’s sovereign credit rating earlier this month, citing fears that its bold Bitcoin gamble may prevent it from obtaining a much-needed $1.3 billion loan from the International Monetary Fund (IMF).

According to Moody’s analyst Jaime Reusche, El Salvador’s fiscal profile would deteriorate further if the government increased its exposure to Bitcoin: If it rises significantly, it poses a much bigger danger to the issuer’s repayment capabilities and fiscal profile.

Key Takeaways (BTCUSD)

• With the Federal Reserve preparing to remove support from the market, riskier assets have slumped globally. Bitcoin, the world’s largest digital asset, fell more than 12% on Friday, falling below $36,000 for the first time since July. Since November’s peak, it has lost approximately 45% of its value. Other digital currencies have taken a similar, if not worse, hit, with Ether and meme coins experiencing comparable drawdowns.
• Bitcoin’s drop from November’s high has taken off more than $600 billion in market value, while the aggregate crypto market has lost more than $1 trillion. While both Bitcoin and the overall market have had considerably higher percentage declines, this is the second-largest loss in dollar terms for both, according to Bespoke Investment Group.
• The administration of US Vice President Joe Biden is developing a first government-wide plan on digital assets that will be released next month. Meanwhile, the US Federal Reserve stated a strong possibility of raising interest rates in March. Economists anticipate a quarter-point rate rise in March. The bitcoin market appears to be bracing itself for what lies ahead.

Price Analysis of BTCUSD

Fear & Greed Index: 13, Extreme Fear

All-time High: $68,789.63

ROI: 24794.07%

24h change: -6.33%

7d change: -21.57%

Market Cap: $635,556,712,965

Circulation Supply: 18,938,537 BTC

Total Supply: 18,938,537 BTC

Weekly Chart Breakdown of BTCUSD

Source: TradingView

The next weekly support is around $30,000 for BTC. We might see a correction before a further decline. Experts suggest that a break below $30k might push the market towards $13k.

Daily Chart Breakdown of BTCUSD

Source: TradingView

$30k level has held support multiple times in the past year. We’ll have to observe price action around this level. If Bulls cannot hold this level, we might see the BTC market tanking further towards $19k.

1 Hour Chart Breakdown of BTCUSD

Source: TradingView

We have just observed a huge volatile bearish rejection on 1h. which could be an indication of BTC tanking towards $30,000.

Final Thoughts

Cryptocurrencies have always been a source of thrill and adrenaline for investors and day traders. But past few months have erased considerable investors from crypto markets and moved towards fungible assets like Gold and Crude Oil.