Bitcoin drops as Wall Street lacks confidence

Bitcoin tumbled nearly 5% lower on Tuesday as investors reassess their positions after the Easter weekend. Rumors about an impending crash in tech stocks are on the rise again, causing risky investments to be hit first and hardest.

Yet analysts do not think this is the start of a new correction as Bitcoin (of which the largest digital currency already experienced two this year).

Economy

Bill Clinton surprisingly won the American presidential elections of 1992 using the slogan ‘it’s the economy, stupid’. This simply emphasized the fact that for the average American voter, the economy is all that really matters.

That economy is still doing surprisingly well and the data that emerged yesterday (ISM factory index) also shows that the largest economy in the world continues to grow faster than its peers. Thus the dollar went higher (bad for Bitcoin).

Manufacturers show sign of revival as ISM index turns positive for first time in 17 months https://t.co/xFEe18BrrT

— MarketWatch (@MarketWatch) April 1, 2024

This also means that the likelihood of an interest rate cut by the Federal Reserve in June is now somewhat lowered again, so investors are taking risky investments off the table wherever they can.

#Bitcoin continues to chop around, right above the key weekly support.

I’ll assume any price action in this region is designed to shake people out — before further price appreciation.

Sitting on my hands until conditions improve. pic.twitter.com/zp7NteeTM1

— Jelle (@CryptoJelleNL) April 2, 2024

Lastly, this titbit of info also fuels more rumors about an impending tech crash (a story fueled by the recent stock sales by billionaires like Peter Thiel, Jeff Bezos and Mark Zuckerberg) and a cryptocurrency sell-off.

I however still agree with the popular Dutch analyst Cryptojelle who stated yesterday that the current drop in the Bitcoin price only serves to shake out the weaker investors before we turn to price discovery again (aka hit a new record).

In my opinion, this moment of weakness in the crypto market could last a few days, but there is no reason to panic yet.