Investing.com – Tuesday’s release of higher-than-expected U.S. inflation data was a dark day for bitcoin. The cryptocurrency fell sharply, resulting in a loss of almost 9% in the 24 hours following the event
The is hovering around the psychologically important $20,000 mark, and if general market sentiment does not improve, further losses are to be expected. Blockchain data provider Santiment said:
“After a dramatic #CPI report with disappointing inflation data, #Bitcoin fell alongside the #SP500’s biggest daily loss in two years. Correlation between sectors remains high, and #cryptocurrencies tend to thrive best when not dependent on #actions”.
If the mentioned correlation continues, bitcoin is likely to fall again towards $16,000. This results from the fact that the fair value for the S&P 500 is, according to Fidelity, between 3200 and 3400 points:
“If 14 times the forward multiple is the correct valuation, then simple math indicates that the fair value for the S&P 500 is between 3200 and 3400 for EPS of $230. This means the bear market is not finished yet”.
But for bitcoin, dropping below $17,000 would mean that crypto investors’ attention would shift towards $10,000.
ADVFN CEO Clem Chambers is one of many financial analysts who believe that if bitcoin fails to hold above the $17,000-18,000 area, the likelihood of a drop to $10,000 increases. rapidly.
From his perspective, this scenario is much more likely than a rebound above $40,000 from the current situation.
This view is reinforced by the fact that cryptocurrencies have in the past tended to pull back 80-85% from their all-time highs.
By Marco Oehrl