The cryptocurrency market experienced a pullback on Wednesday, mirroring a decline in the stock market. Bitcoin and Ethereum, the two leading cryptocurrencies, both retreated from recent gains, with Bitcoin falling as low as $62,770 and Ethereum dipping below $2,600. This downturn coincided with a broad stock market slump triggered by a downgrade of auto stocks by Morgan Stanley. Analysts at the firm downgraded shares of Ford Motor Co. and General Motors Co., leading to a significant decline in their stock prices.
The retreat in the cryptocurrency market saw a significant amount of liquidations, with a total of $93 million wiped out in the last 24 hours. This was primarily driven by bullish-leveraged traders who suffered losses as the market reversed its recent upward trend. Bitcoin’s Open Interest, a measure of outstanding derivatives contracts, slumped by more than 3%, further indicating that traders were closing out their positions.
Despite the recent decline, the overall market sentiment remained “Neutral” according to the Cryptocurrency Fear & Greed Index. The index, which gauges investor sentiment based on various market factors, indicates that investors are currently neither overly bullish nor bearish.
While the market faced a downturn, analysts continue to offer varying perspectives on Bitcoin’s future direction. Noted cryptocurrency analyst Ali Martinez highlighted $63,300 as a key support level for Bitcoin. He believes that if this level holds, Bitcoin could rally to $65,500. However, if it breaks, he predicts a dive to $60,365.
On the other hand, widely followed cryptocurrency trader, Coach K Crypto, drew attention to Bitcoin’s average gains in the fourth quarter, which have historically been around 88%. He suggests that if Bitcoin achieves this average gain this year, it could reach $120,000, potentially boosting the performance of altcoins.
The global cryptocurrency market capitalization stood at $2.21 trillion, shrinking by 2.01% in the last 24 hours. The decline in cryptocurrency prices comes as investors continue to monitor global economic conditions and the potential impact of inflation on the market.
