Bitcoin briefly slipped below the key $60,000 mark on Thursday, falling to around $59,000 before recovering part of its losses, as investors pulled back from risk assets amid a stronger US dollar, inflation concerns and uncertainty surrounding cryptocurrency regulation in the United States.
The world's largest cryptocurrency later traded at $61,629.21, down 2.09 per cent over the previous 24 hours, according to CoinMarketCap data. Ethereum also recovered to $1,650.79, while BNB and XRP traded at $570.12 and $1.09, respectively.
The decline marks Bitcoin's first move below the $60,000 level since October 2024.
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Stronger dollar and macroeconomic concerns weigh on crypto
Analysts attributed the decline in cryptocurrency values to a combination of macroeconomic factors in the global economy and uncertainty regarding US policy. The US Dollar Index (DXY) reached its highest level in 13 months, impacting cryptocurrencies because they are known to be inversely correlated with the dollar.
Pexels Furthermore, investors will be keeping an eye out for crucial US economic data such as the PCE Inflation report, GDP, and jobless claims data which may impact the rate decisions of the US Federal Reserve. "The strong dollar had increased the selling pressure in the crypto space," Akshat Siddhant, Lead Quant Analyst at Mudrex, was quoted saying.
"Bitcoin hit a multi-year low of $59,000 as risk-off sentiment continued to dominate global markets. The dollar index stands at a 13-month high, indicating growing confidence in the US economy," Siddhant added.
He went on to say that the uncertainty regarding the crypto regulation in the US after the delayed signing of a housing bill related to CBDCs was affecting the sentiment of investors.
Analysts identify key support level
Piyush Walke, Derivatives Research Analyst at Delta Exchange, said Bitcoin's decline reflects both macroeconomic and market-specific pressures. According to Walke, investors remain concerned about persistent inflation, expectations of higher interest rates and shifting retail investment towards artificial intelligence-related stocks. He said the $59,000 level has emerged as a crucial support zone.
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"A break below $59,000 could trigger a deeper correction toward the $52,000 region. On the upside, immediate resistance lies between $64,400 and $65,000," Walke said.
Ethereum is facing troubles as well, as noted by Walke, since any move below $1,550 may result in a drop to $1,440, with the $1,680-$1,700 area being an important resistance level.
Despite the sharp drop, experts are convinced that the next move of the crypto market will be defined by upcoming US economic data and the Fed's monetary policy expectations.
FAQs
Q1. Why did Bitcoin fall below $60,000?
The fall in Bitcoin prices happened because of a strengthening US dollar, inflation and rising interest rates concerns, uncertainties regarding US crypto legislation, and risk aversion sentiment in global markets.
Q2. What is the next key support level for Bitcoin?
Based on the analysis of market experts, the next key support level is the $59,000 area. Any move below it may result in a deep correction to $52,000.
