Bitcoin (BTC), which exceeded $124,000 and reached a new ATH, has been declining since that day.
BTC, which reached a new ATH on August 14, continues to experience declines as the higher-than-expected U.S. PPI data continues to negatively affect investor confidence.
Analysts say that economic data from the U.S. has diminished hopes for a Fed interest rate cut, strengthened the dollar, and increased aversion to risky assets.
At this point, Bitcoin has seen a decline of over 2% in the last 24 hours, dropping to around $115,600.
While the decline in Bitcoin is also reflected in altcoins, Ethereum (ETH), which was very close to breaking its previous ATH, dropped 3% to $4,340, and XRP fell 4% to $3. As significant declines were experienced in other altcoins, analysts evaluated the decline and shared their expectations.
What Are Investors Expecting from Bitcoin?
Vincent Liu, CIO of Kronos Research, told The Block that the decline is due to U.S. data and decreasing investor confidence.
"The recent decline in Bitcoin is attributed to higher-than-expected U.S. inflation and the cautious behavior of investors preferring to act carefully in this environment.
High inflation reduces hopes for a Fed interest rate cut next month, strengthens the dollar, and fuels risk-averse behavior."
Liu stated that U.S. Treasury Secretary Scott's comment that the government would not purchase new Bitcoin for strategic reserves has further decreased investor confidence and fueled the decline.
Liu pointed out that investors have withdrawn from the cryptocurrency market in the negative macroeconomic environment, adding that they are waiting for a new catalyst and improvement on the Fed and macroeconomic fronts before returning to crypto.
What Are the Critical Levels for Bitcoin, Is the Situation Really Bad?
However, BTC Markets Crypto Analyst Rachael Lucas stated that the situation in Bitcoin and crypto is not as bad as it seems, indicating that spot ETF data shows the market decline is more related to capital rotation than a crash.
"Although daily spot Bitcoin ETF flows show a modest decline overall, institutional participation continues to remain at a certain level.
This indicates that investors are shifting towards lower-cost products rather than completely exiting the market."
Lucas stated that the key support levels for Bitcoin are around $115,000 and $112,500, adding that a break below these levels could pose a risk of a drop to $110,000.
Lucas finally noted that the market's focus has shifted to the Fed's Jackson Hole Symposium this week, stating that a moderate tone from the Fed here could revive risk appetite and initiate a rally.
Stay tuned for the latest developments
