Factors like profit-taking and the Federal Reserve’s upcoming meeting have been highlighted as key contributors to the recent declines in Bitcoin’s price.
Recently, Bitcoin has been in a downward trend, shedding over $10,000 from its value after hitting a record high of nearly $74,000 last week.
Despite anticipations of a correction and predictions of a 20% drop before a rebound, the question remains about how much lower Bitcoin could fall. To gain insight, we consulted with the AI chatbot Perplexity, a notable alternative to ChatGPT, for its perspective on the potential future downturns for Bitcoin.
BTC’s Price Decline
The beginning of the year saw Bitcoin on a bullish trajectory, further boosted in January by the launch of 11 spot Bitcoin ETFs in the United States. The demand for these ETFs surged, propelling Bitcoin to a 60% increase in value and reaching a new high of $73,800.
Nevertheless, the trend reversed, and Bitcoin faced a significant correction, dropping to $65,000 over the weekend and further dipping below $61,000 recently, marking a 20% decrease from its high in just under a week.
The Causes
Perplexity suggests that a major factor behind Bitcoin’s sharp decline is investors and miners cashing in on their holdings, especially those who have been holding since Bitcoin’s peak in 2021 and newcomers who invested when Bitcoin was under $30,000.
Moreover, the upcoming Federal Reserve meeting is causing widespread uncertainty across financial markets, particularly impacting the volatile crypto sector. The Fed’s decisions on monetary policy have historically influenced Bitcoin’s price fluctuations.
Despite this, the consensus among experts is that the Fed is unlikely to increase interest rates, following a pattern of maintaining rates in recent meetings.