Bitcoin plunges amid crypto carnage

Everything bar the US dollar has fallen today - cryptos included. Today saw Bitcoin drop to a fresh 2022 low below $33K, as the carnage continued for the fifth straight day and into the seventh consecutive week. At just over $32K, Bitcoin is now more than 50% cheaper compared to the record high it had reached last year. The next big level at $30K is now within sight, but it remains to be seen whether it can bottom around this psychological level.

Source: StoneX and TradingView.com

So far, there appears to be no dip buyers despite the significant sale. Of course, Bitcoin and other digital currencies are not alone. Even gold has been unable to decouple itself from the ongoing bond market rout or the rallying US dollar. In fact, if you look at gold and FX markets, there appears to be no signs of any serious haven demand. As well as precious metals, the likes of the Japanese yen and Swiss franc have shown no strength whatsoever.

Much like gold and silver, cryptos are struggling because they don’t provide any interest or dividends. The fact that the dollar is meanwhile also rising, makes them even less appealing. It is also possible that much of the crypto selling could be due to forced liquidation of crypto assets as investors try to free up margin for their losing equity and metals positions.

Against such a fundamental backdrop, it is difficult to see why cryptos will bottom out any time soon. Granted, we will see bounces here and there, but for as long as yields on government bonds are on the rise and the dollar is in an uptrend, the risks remain skewed to the downside.

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