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Bitcoin Retreat Below $30,000: A Threat To Crypto’s 2023 Dominance Over Stocks?

As the year 2023 continues to unfold, Bitcoin’s retreat below the pivotal $30,000 mark raises questions about the overall strength and stability of the cryptocurrency market.

Once, the crypto market held a significant lead over traditional stocks, according to Bloomberg. However, this advantage seems to be dwindling as Bitcoin – a leading market indicator – exhibits signs of struggle. The year-to-date rise of the top 100 digital tokens now stands at 46%, narrowing the gap with the 41% increase of the tech-driven Nasdaq 100 Index.

Technology stocks, particularly those influenced by artificial intelligence hype, have been rapidly gaining ground. This surge resulted in the Nasdaq 100 Index briefly surpassing the MVIS CryptoCompare Digital Assets 100 Index in June.

A chart illustrating Nasdaq 100 Index briefly surpassing the MVIS CryptoCompare Digital Assets 100 Index in June.

Impact of Regulatory Changes And Fed Decisions

Previously, the crypto market received a positive push from both regulatory efforts on digital assets that face a stumbling block in US court on digital assets and the hope that spot Bitcoin exchange-traded funds (ETFs) would be authorized in the US.  However, these boosting factors have waned.

Investors are now cautiously considering how the anticipated interest-rate hike by the Federal Reserve could impact both traditional and digital markets.

According to Caroline Mauron, co-founder of digital-asset derivatives liquidity provider OrBit Markets, the rally has lost momentum since the initial excitement sparked by the ETF news. “There are no other visible catalysts on the horizon,” she noted.

She also hinted at a potential silver lining, pointing out that the “downside risk should be limited as the Fed is near the end of the current rate hiking cycle, which should support risk assets including crypto.”

Bitcoin Chart Patterns Signal Warning Signs

Further cause for concern is seen in the various chart patterns that track Bitcoin’s performance. A key indicator, Bitcoin’s 20-week Bollinger bandwidth, has contracted to its narrowest in seven years. This tightening suggests that moves in the value of Bitcoin could intensify, according to Bloomberg.

If crucial thresholds aren’t maintained, it’s likely we could see a downward trend. The Bollinger study also provides an invaluable method for analyzing the volatility of this digital asset.

Market analyst at IG Australia Pty, Tony Sycamore, noted the potential for Bitcoin’s drop to continue, “Bitcoin should extend toward $26,000/$25,000 before finding support,” he predicted.

Meanwhile, Bitcoin price has continued to swim in red over the past week following its fall below the $30,000 mark. Particularly, in the past 24 hours, the asset has traded slightly above $29,000 down by 1.3%. This price action has resulted in more than 45,000 traders caught in the crypto market total liquidation of over $130 million in the past day.

Furthermore, Bitcoin currently has a 24-hour high of $29,762 and a 24-hour low of $29,983, at the time of writing. The asset’s market cap has plunged from a high of $583 billion seen last Tuesday to $567 billion, as of today. Additionally, BTC trading volume has also declined in the past week indicating less trading activity.

Bitcoin (BTC)’s price chart on TradingView

Featured image iStock, Chart from TradingView