According to research, Bitcoin (BTC) has lost seven consecutive weeks for the first time in its history, owing to a dip in broader markets, harsher crypto regulations, dwindling retail interest, and systemic dangers in the crypto sector.
After falling to $37,000 from November's lifetime highs of about $69,000, Bitcoin rose to near $47,000 in mid-March on a two-week run. The asset has dropped every week since then, and if present market conditions persist, it might fall as low as $20,000.
Bitcoin slid for seven straight weeks. (TradingView)
Bitcoin, the world's most valuable cryptocurrency by market capitalization, has long been marketed as an inflation hedge, or an investment that is claimed to protect against currency or other asset depreciation.
However, because bitcoin is heavily correlated with global markets and has traded similarly to risky technology companies in recent months, this has not happened. Meanwhile, other analysts claim that as bitcoin prices rise, investors are dumping it.
"The tendency of selling cryptocurrencies on price increases, in our opinion, continues. The grim picture for US monetary policy, with no light at the end of the tunnel in the form of rate hikes, adds to the negative "Alex Kuptsikevich, a market analyst at FxPro, wrote in an email.
"In the coming weeks, we don't expect the bears to relinquish their grip. We believe that a change in sentiment will not occur until the 2018 highs near $19,600 are reached "Kuptsikevich continued.
Last week, bitcoin plummeted near $24,000 as the stablecoin tether (USDT) lost its tie to the US dollar. Investor sentiment was already shattered by the collapse of Terra's LUNA and its stablecoin terraUSD (UST).
Concerns about inflation have led to bitcoin's recent decline. The Federal Reserve of the United States raised interest rates for the first time since 2000 earlier this month, attempting to tighten monetary policy after providing $2 trillion in stimulus in recent years.
The Fed's vigorous tactics to limit inflation, according to Goldman Sachs analysts, could lead to a recession, according to a note published in April. Over the next two years, the investment bank estimates a 35 percent chance of an economic contraction - a phase of the business cycle in which the economy as a whole is in decline.
Over the weekend, former Goldman Sachs CEO Lloyd Blankfein repeated that stance, saying the US economy was "very, very high risk." If the current correlation holds, such an atmosphere might induce a sell-off in US equities, which could spread to bitcoin and cause further sell-offs in the coming weeks.
The dangers of a sell-off may already be manifesting themselves. According to reports, the world's largest bitcoin fund, the $18.3 billion Grayscale Bitcoin Trust (GBTC), saw its market discount expand to an all-time low of 30.79 percent last week. The discount could be interpreted as a pessimistic indicator, indicating that traders' interest in bitcoin is decreasing. Digital Currency Group owns both Grayscale and CoinDesk.
GBTC is one of the few alternatives for traders in the United States to acquire exposure to bitcoin price changes without having to buy the cryptocurrency.
According to CoinGecko data, Bitcoin was hovering just below the critical support level of $30,000 at the time of writing.
