[Why did the Bitcoin price fall today? When will it resume? 】
Bitcoin prices have officially entered a bear market, falling more than 20% after three consecutive days of decline this week. Investors are worried that the U.S. Federal Reserve may tighten monetary policy, leading to a withdrawal of funds from the crypto market.
As inflation accelerates and economic growth slows, concerns about stagflation and persistent inflation have intensified. The latest personal consumption expenditure (PCE) data showed that inflationary pressures have not abated, with GDP growing by only 1.6% in the first quarter, indicating a stagflation trend. Policy developments at the Federal Reserve and decisions by Chairman Jerome Powell are critical to the stock and crypto markets, which are bracing for a potential collapse.
Bitcoin prices plunged more than 10% to $56,000, largely as institutional investors shun risky assets and retail investors panic sold as risks rose. Bitcoin has fallen 22% since its all-time high of $73,803 in March, technically entering a bear market. Although Bitcoin ETFs have seen strong inflows this year, with Bitcoin up 35% year over year, investors are beginning to take profits as demand for spot Bitcoin ETFs weakens.
The U.S. dollar index (DXY) rose to around 106.4, near six-month highs, as overall economic pressures intensified. The U.S. 10-year Treasury bond yield (US10Y) also climbed to 4.67%, indicating that the market expects the Federal Reserve to maintain high interest rates for a long time. These trends contrast with Bitcoin prices.
The total market capitalization of the crypto market dropped from $2.34 trillion to $2.13 trillion, with $210 billion evaporated in a short period of time, and liquidations reaching $250 billion. Coinglass data shows liquidations exceeded $475 million, including $420 million in long positions.
Analysts predict that Bitcoin price may start a sharp rebound after falling below $50,000, but whale accumulation behavior may push the rebound support to about $54,000. The market's eventual recovery may begin after the May 31 option expiration date.