By
Bhushan Akolkar
May 10th, 2024
While short-term sentiment remains negative, most experts do not see this decline as doom just yet. A recovery in Bitcoin price is expected to increase investors’ confidence in altcoins too.
The price of Bitcoin (BTC) has continued to decline, seeing a 10% decline in the last 7 days. This downward pattern has been the order shortly after the approval of spot Bitcoin ETFs on January 10. The event that was anticipated to push the price higher was rather a sell-the-news event. Many large BTC holders started to sell their holdings since the price did not skyrocket immediately after the news.
Bitcoin Price Increase Boosted Other Major Cryptos
Bitcoin’s price had risen to new highs in the weeks before the spot ETF approval, with many anticipating that the event would make the price rise to or beyond its all-time high. The price of Bitcoin started to rise in September 2023, from $25,000 to $48,000 on January 12, just 2 days after the spot BTC ETF approval.
The rise in September also triggered a bullish run for Solana, Ethereum, and many other major altcoins from October until later in the year. However, since the initial buzz around the ETF approval could not be sustained, many large holders also started to offload their holdings, causing the price to decline. Now at $38,000, the close to 20% decline is a substantial one for the crypto market.
Analysts Expect Further Decline
Many traders are hoping that the $38,000 support holds, but if it does not and the short-term negative sentiment continues, Bitcoin is poised to have a continued decline to lower levels.
A notable crypto analyst, Ali, on his X page hinted to his more than 40k followers about the historical price moves that Bitcoin has made in the last two cycles, and the pattern is also repeating itself at this time. According to him, Bitcoin has declined to the 50% Fibonacci retracement level in the last 2 bull cycles after it reached the 78.6% level, and if this pattern is to happen again, it means we may continue to see a price decline to as low as $32,700, where the current 50% Fibonacci retracement level is.
Reflecting on the last two bull cycles, $BTC typically retraced to the 50% Fibonacci level after hitting the 78.6% Fib.
Recently, #Bitcoin reached this 78.6% Fib level again, suggesting a potential correction. If this pattern holds true, we could see #BTC drop to $32,700,… pic.twitter.com/AArR9adJbC
— Ali (@ali_charts) January 23, 2024
Another notable analyst on X, MikybullCrypto, mentions that the decline is not yet over. He also expects the price to go down a little more before there is a possibility of a rebound.
One thing to note from many analysts’ views is that they expect the spot ETF approval to have a long-term bullish effect on crypto, and they also believe in the long-term positive potential for BTC. That is why MikybullCrypto keeps encouraging his close to 60k followers to keep buying the dips using a dollar cost averaging (DCA) strategy.
Altcoins also Continue to Dip
The negative market sentiment has affected many other cryptocurrencies too. Solana has declined by 17% in the last week; Avalanche has also declined by more than 22% in the same period; and Ethereum has declined by 12%.
The tough time these coins are having is also affecting the tokens in their ecosystems, even those that have had a fine run recently. One example is BONK in the Solana ecosystem, which has seen a decline of close to 50% in one month. Also, JOE token of the Avalanche blockchain has dipped by more than 40% in 4 weeks.
While short-term sentiment remains negative, most experts do not see this decline as doom just yet. A recovery in Bitcoin price is expected to increase investors’ confidence in altcoins too.