Bitcoin tumbled below $50,000, before bouncing back this morning. This follows exuberant trading yesterday, which saw the cryptocurrency claw to a fresh high of $58,332 during early Asian hours.
How deep will it go? According to David Lifchitz, CIO for Paris-based quantitative trading firm ExoAlpha, a 15% correction isn’t out of the question. “$50,000 looks like the first stop for a mild pullback, but a second leg down could take it down to $40,000, while the $30,000 zone looks like the ultimate bottom should things turn ugly in the short term,” Lifchitz said.
It’s not just tea leaves, there are macroeconomic forces that might explain this recent price action. CoinDesk’s Omkar Godbole notes that U.S. inflation-adjusted bond yields are rising, with the real yield turning positive for the first time since June 2020. This supports a bullish case for the U.S. dollar – as investors de-risk and put money in U.S. Treasury bonds when yields rise – and a bearish case for gambles like bitcoin and stocks.