Bitcoin Licks Wounds After Bloody Sell-Off

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The price of bitcoin plunged below $30,000 for the first time since mid-2021 on Wednesday. The breakdown triggered another sell-off that brought the prices to the December 2020 low of $25,200 on Thursday morning. The coin has bounced back above $28,000 since then, but the overall tone in the cryptocurrency space remains downbeat. Of note, the recent rout erased more than $200 billion from the market today.

Similarly, global stock markets along with other riskier assets have been suffering solid losses these days as geopolitical tensions keep rising. The risk-off tone deteriorated further after Finland said earlier today that it would apply to join NATO "without delay", while Russia vowed an unspecified response. 

In turn, rising geopolitical uncertainty pushed the safe-haven dollar to fresh twenty-year highs around 104.70. Adding to upside pressure surrounding the greenback, fresh data out of the United States showed that PPI fell to 11.0% in April, above expectations for a fall to 10.7% from 11.2% in the previous month. In general, the market showed little reaction to the release, but the fact that inflation in the country slows down not as quickly as expected, implies that the Federal Reserve would continue to stick to its aggressive tightening plan. 

Massive risk aversion coupled with the rallying dollar could cap bitcoin’s recovery attempts in the near term. The BTCUSD pair needs to regain the $30,000 mark at this point in order to stage a more sustained bounce eventually. However, bitcoin and its counterparts look unlikely to shrug off the selling pressure for the time being, with bearish risks persisting. By the way, sellers could reemerge somewhere around $30,000 to send the prices to fresh long-term lows, probably around the $20,000 figure.