Bitcoin and other major cryptocurrencies took a tumble on Tuesday, extending a correction that began after the record highs reached last week. Analysts offer mixed signals, with some predicting further price drops despite a generally optimistic outlook for the future of cryptocurrencies.
Over the past day, Bitcoin shed 8% to reach a recent low of $62,500, falling below $62,900. This follows its meteoric rise to nearly $74,000 last week, which itself came after surpassing its prior peak of $69,000 in November 2021.
“Bitcoin is currently at its lowest point in two weeks,” said Alex Kuptsikevich, an analyst at FxPro. “A close below $65,500 could signal a deeper correction, potentially targeting the $60,000 mark—a classic 61.8% retracement level.”
The current trend suggests a short-term market correction. Profit-taking by long-term holders could be a contributing factor. However, many market participants remain bullish on crypto’s long-term prospects.
One positive force is the influx of investment into spot Bitcoin ETFs since their US regulatory approval in January. This has invigorated investor interest, with digital asset investment products experiencing record weekly inflows of $2.9 billion last week, according to CoinShares. Year-to-date inflows now stand at $13.2 billion.
Another factor is the upcoming “halving” of Bitcoin issuance scheduled for April. This event will reduce the creation of new tokens, tightening supply while demand is rising, potentially pushing prices up. Additionally, the robust risk sentiment in broader markets, with the S&P 500 and Nasdaq hovering near record highs, also bolsters cryptocurrencies, which are sensitive to overall market trends.
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While Bitcoin led the decline, other major players were not spared. Ether, the second-largest cryptocurrency, tumbled 10% below $3,300 after exceeding $4,000 last week. Smaller altcoins like Cardano and Polygon also suffered, dropping 11% and 13% respectively. Popular meme coins Dogecoin and Shiba Inu were not exempt, experiencing losses of 13% and 11%.