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Bitcoin has fallen to $26K - will there be a retreat close to $25K?

Due to market volatility, limited liquidity and the deliberate sell-off of high-yielding tech stocks, among other factors, bitcoins have been losing value for months. Low interest rates have pushed the valuation of the broad market to unusually high levels since the global financial crisis of 2008. According to analysts, the ten-year bubble has burst and the asset is returning to reality.

Bitcoin has fallen to $26K - will there be a retreat close to $25K

On Thursday, bitcoin fell to its lowest level in 16 months, prompting the abandonment of risky assets such as technology stocks. The collapse of the so-called TerraUSD stablecoin also put pressure on the cryptocurrency market. Ether, the world's second-largest cryptocurrency, lost more than 10% of its value on Thursday, falling for the first time since July last year to USD 1 833.

As part of the cryptocurrency market sell-off, bitcoin (BTC) has fallen below the USD 27 000 level. In November 2006, it reached an all-time high of USD 69 000.

Bitcoin decreases down

The price of the world's largest cryptocurrency dropped to $26,970, reaching its lowest level since December 28, 2020. In the last eight sessions, BTC has lost a third of its value, or $13,000.

In the last 24 hours, the price of bitcoin has dropped by 7% and is currently at the lower limit of the 12-month price range. On 24 January this year and on 20 May last year, the relative strength index (RSI) on the daily chart was highly oversold. However, during a decrease, the state of overselling may persist for several weeks until the price recovers. For now, this relief rally could be short-lived, especially given that last week it fell significantly below the $35,000 level.

What investors are afraid of

Cryptocurrencies, along with stocks, fell sharply after the U.S. Bureau of Labor Statistics showed consumer prices rose 8.4 percent in April, slightly higher than economists polled by Dow Jones had expected.

This stock market downturn frightened investors and prompted them to liquidate risky assets such as cryptocurrencies. The correlation between cryptocurrencies and the technology-weighted S&P 500 and, more recently, the technologically weighted Nasdaq Composite index remains significant. AscendEx investor Michael Rinko says the cryptocurrency industry has been under pressure for some time.

"As the U.S. central bank continued to raise interest rates, stock prices continued to fall, and so did cryptocurrencies. This has made the overall market uneasy," says Rinko.

Coinbase shares fell due to the collapse of BTC

Meanwhile, Bitcoin's plunge has had a significant impact on Coinbase. In the first quarter, the cryptocurrency brokerage house showed a loss, and revenue fell by 28 percent compared to last year, not meeting Wall Street expectations. On Wednesday, Coinbase shares fell by more than a quarter and reached a historic low.

In the past week alone, the company's stock has lost more than 50 percent of its value. The stock is now down more than 75 percent in a year and is trading more than 85 percent below the all-time high reached in November.

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