Bitcoin plunges below $18,400 yet again over regulatory concerns and looming interest rate hike

One of bitcoin’s selling points is that the world’s largest cryptocurrency is a hedge against inflation and immune from government regulations and rising interest rates. But as we’ve seen in recent months, the reality could not be further from the truth as bitcoin prices swings from its $47,000 peak in March to $18,000 in the past few weeks.

Today, bitcoin’s seesaw continues as the price plunges below $18,600 yet again over regulatory concerns and looming interest rate rise. Bitcoin, the world’s largest cryptocurrency by market value, fell about 5% to a three-month low of $18,387.

Bitcoin is not alone. Ether, which just came out of its recent “merge,” dropped 3% to a two-month low of $1,285 and is down more than 10% in the last 24 hours. The carnage didn’t stop there. Altcoins and smaller tokens were also deeper in the red. Bitcoin is currently at about $18,688 as of the time of writing.

What might happen to bitcoin is anyone’s guess. “It’s speculation as to what might or might not happen,” said Matthew Dibb, COO of Singapore crypto platform Stack Funds, on the regulatory outlook.

“A lot of the hype has come out of the markets since the Merge,” he said. “It’s really been a sell-the-news type of event,” he added, given the nervous global backdrop, and said ether could test $950 in coming months.

“Looking at the landscape right now, both fundamentally and technically, it’s not looking great. There’s no immediate bullish catalyst that we can see that’s going to prop up these markets and bring in a whole lot of new money and liquidity.”

In mid-April 2021, the world’s most popular cryptocurrency reached its peak of $64,829.14. A month later, bitcoin plunged by about 40% from its record high, and $300 billion was wiped off the crypto market. On May 19, 2021, bitcoin hit an intraday low of around $36,189 at 7:30 a.m. Eastern Time. But that was just the beginning. Bitcoin has since lost about half of its value since then.

Meanwhile, some analysts say bitcoin may fall even further and it could be heading down to $10,000. Leigh Drogen, general partner and CIO at Texas-based digital assets quantitative hedge fund Starkiller Capital, wrote:

“We’re now in the liquidation phase, [with] firms blowing up,” like Three Arrows Capital, or 3AC, the crypto hedge fund that is having positions liquidated, per a report from The Block, “and on-chain liquidations of over-levered players.” He adds that if Bitcoin slips below $20,000, “there is going to be some serious forced selling from those really big players,” he suggests, and “that may kind of bring about the eventuality of the bottom.”

Other analysts say a ‘massive capitulation’ is on the horizon. “Bitcoin’s daily range has narrowed massively, and this is giving us an indication that a massive capitulation is coming,” said Naeem Aslam, an analyst at broker AveTrade. “We believe that this capitulation can be any day now as Bitcoin has been trading in a narrow range for a long period of time.”

Meanwhile, other analysts think bitcoin’s current volatility is relatively low compared to historical records. For example,  according to data firm Coinglass, Bitcoin’s average 30-day volatility, a measure of how its price varies over a set period of time, has dropped to 2.7% from over 4% in early July. This may be a good thing for bitcoin.