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This is why the Bitcoin crash happened!

 


What happened to the Bitcoin course?

The Bitcoin price experienced a sharp crash in the last 48 hours. On the evening of May 5, 2022, the Bitcoin price scratched the $40,000 mark after a sharp rise. However, Bitcoin failed to break through this key resistance. Unfortunately, Bitcoin then crashed.


The Bitcoin price fell from USD 39,500 below the USD 36,000 mark within 6 hours. The drop then slowed somewhat and the price continued down to $35,500. After that, the Bitcoin price stabilized again.


Why wasn't the Bitcoin course more violent?

The price of bitcoin fell by almost 10%. In recent months, however, there have been even stronger crashes in cryptocurrencies. However, Bitcoin was able to stabilize here. This was because the bitcoin price met a lower resistance at $35,000.



$35,000 has been an extremely important mark over the past few months. They represent the lower resistance for the Bitcoin price, which has now been stable for several months. This value always protects the Bitcoin price from a stronger crash.


What was the main reason for the Bitcoin crash?

The Bitcoin crash was mainly triggered by a single event. The US Federal Reserve increased interest rates by 0.5 percentage points. This was the highest increase in 22 years. The FED wants to use this to counteract the strong inflation in recent months. Normally, the base rate is only raised in 0.25 increments.


Federal Reserve

The Bitcoin price has suffered greatly in recent months from rumors of an increase in key interest rates. Bitcoin crashed again and again when rumors flared up again. Now there was an increase . But facts usually have less of an impact on the Bitcoin course (positively or negatively) than rumours. But the 0.5% increase seems to have surprised the Bitcoin course.


What other developments play into the Bitcoin crash?

The increase in key interest rates was the trigger for the Bitcoin crash. But there are many additional factors that are favoring the decline in the Bitcoin price at the moment and also in recent months. On the one hand, the Bitcoin price is currently heavily dependent on the development of tech stocks (in the NASDAQ). If they have difficulties, so does Bitcoin.


Bitcoin stocks

This development began with Bitcoin becoming more and more integrated into the classic financial market through financial products such as ETFs and futures. This makes Bitcoin more dependent on the stock market. Tech stocks in particular correlate with the price development of bitcoin. These have lost value as part of the interest rate hike. 


How could the Bitcoin price develop now?

The Bitcoin price has experienced several crashes in recent months, some of which are even worse than the current crash. The $35,000 has always been a stable value below which Bitcoin could not fall. Should this resistance break, a massive Bitcoin crash could ensue. 


However, this resistance could also hold and we see a trend reversal in the next few months. There is still a chance that Bitcoin could still catch up on its massive bull run, which failed to materialize at the turn of the year. Historical price developments support the thesis that Bitcoin still has a big bull run in it.

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