The bitcoin price has fallen below $20,000 in the past 24 hours and that has several consequences for the market. What do the analysts say?
1. Very Low Bitcoin Dominance
Bitcoin continues to suffer from the macro environment, with America’s central bank, the Federal Reserve, playing a major role. For the time being, it does not appear that the interest rate policy will be adjusted.
Fears of continued high energy and food prices, also due to tension in continental Europe, are gripping central banks. One of the consequences of the policy is that investors flee to the dollar and leave stocks, gold and bitcoin. This results in falling prices, moreover, part of the market has been selling for months with a realized loss, their selling price on-chain is lower than their purchase price.
Central bank policies are also making it increasingly expensive for central banks to buy bonds. In other words, it is also pushing up government debt more and more and the question is how long the central banks can continue to do so.
Because as soon as companies and households find themselves in a recession, the central banks in this current system will have to come to the rescue again by printing more money. To print money one has to buy government bonds, and then it is disadvantageous if they have become much more expensive. In short, there is also an end to a shrinking policy and less liquidity for the financial markets and it remains when the Fed comes round (pivoting in technical jargon).
Due to the falling bitcoin price, the share of btc in the total crypto market is decreasing. Bitcoin dominance is just 39%, according to CoinMarketCap figures, the lowest point since June 2018.
Tradingview also assumes 39.88%, still the lowest point of the past eight months.
2. Less stock in green
Logically, a falling price also has consequences for the number of wallets that are still in the green. Figures from Glassnode show that only 52% of current bitcoin addresses are in the green. That’s a monthly record low based on the seven-day average.
Conversely, there is also a high percentage of stock that is at a loss, according to Glassnode figures.