Bitcoin slides below the $21,000 level

After a successful two-week run in which Bitcoin surged nearly 27%, the coin appears to have lost momentum. Bitcoin’s recent drop of 2.17% in the last 24 hours has pushed it below the $21,000 level. The global crypto market showed a similar trend as various cryptocurrencies (such as Ethereum, Polkadot, etc.) also fell below Wednesday’s level.

As a result, the total valuation of the crypto market has fallen back below the $1 trillion level (to $996 billion), which it had managed to breach on January 14 (after two months). Although Bitcoin is in a significantly better position than it was a month ago, many investors were counting on its recent run to help it break above the $22,000 mark.

The fall in the price of Bitcoin is supposed to signal the start of a bull trap, which could lead to huge losses for investors who invested in the cryptocurrency in the last two weeks. However, this drop could be attributed to a crackdown by the US Department of Justice. Bitzlatowho participated in money laundering activities.

However, the cryptocurrency market has more positive news than negative, as recent policy decisions and inflation figures could help you get out of the never-ending cryptocurrency winter. With a further decline in inflation numbers, we could see growth numbers similar to post-2022.

Crypto and the falling PPI

The health of the crypto market is highly dependent on the performance of the broader economy. 2022 turned out to be a bad year for cryptocurrencies, mainly due to rising inflation levels in the US and Europe. Indices such as the Producer Price Index (PPI) and the Consumer Price Index (CPI) can determine both the short-term and long-term performance of the crypto market.

The Producer Price Index (PPI) indicates the rise and fall in the price of output earned by producers in the economy. A decrease in the PPI is followed by a further decrease in the Consumer Price Index (CPI), since consumers would not be willing to pay more when the price of production for producers decreases.

An increase in the PPI leads to a decrease in output growth, which further leads to job cuts in the economy (large companies are used to laying off thousands of employees before a potential downturn). A decrease in the level of employment also leads to a decrease in investment activities. On the other hand, a decline in the PPI could boost the stock and cryptocurrency market.

According to the US Bureau of Labor Statistics, the producer price index (PPI) decreased by 0.5% in December. The final demand PPI for the month of December has shown interannual growth of 6.2%, significantly lower than that of November (7.4%). One of the main reasons behind the downward movement in the PPI could be attributed to a whopping 13% drop in gasoline prices.

A drop in PPI could also help ease the Fed’s previously hawkish stance toward raising interest rates. In the past two years, the Federal Reserve has increased interest rates seven times. However, the recent interest rate hike by the central bank came as a relief to investors as the rise eased to just 50bp from 75bp in the last four sessions.

Justice Department crackdown on Bitzlato

Bitcoin’s drop in the past 24 hours is suspected to be due to the US Department of Justice’s action against Bitzlato. According to the Department of Justice, Bitzlato is a lesser-known crypto exchange that was frequently used by criminals to launder money. The Justice Department has arrested the chief executive of the Hong Kong-based exchange, Anatoly Legkodymov, on charges of supporting criminal activities.

DOJ claims the founders and other executives knew about illegal activities taking place on its platform, which was used to launder nearly $700 million over the past five years. Bitzlato has been labeled a “top money laundering concern” by the Financial Crimes Enforcement Network (FinCEN), thus isolating it from the global financial system.

Bitcoin price movement

Although Federal Reserve interest rates appear to be declining with each subsequent session, Bitcoin’s performance in the near future could be worsened by large-scale sell-offs by institutional investors. Various FTX shareholders may find the need to sell their Bitcoins.

Bitcoin, being the industry leader, has always been a highly volatile asset (even among cryptocurrencies). This makes the coin even more vulnerable to any political decision or macroeconomic indicator that affects the cryptocurrency market.

2022 saw a growing preference for new age utility tokens among investors, while bitcoin fell during the crypto winter. These tokens are backed by new and exciting projects that provide utility to their users. Unlike a normal cryptocurrency that depends on market conditions for its growth, these utility tokens grew with the growth of your project.

Other altcoins

Some of the new age cryptocurrencies that have done particularly well in their pre-sales are listed below.

MEGA

The web based 3 Meta Masters Guild is the largest mobile gaming guild. It allows its users to play multiple exciting games on mobile phones and earn rewards for the same. Players are rewarded in the form of “gems”, which can then be converted into MEMAG (the official Meta Master’s Guild token). Users have the discretion to sell their tokens or stake them to earn staking rewards.

The team behind Meta Master’s Guild have tried to make the games as exciting as possible. They believe that rewards alone cannot attract users for long and can only be done if the games are attractive. The Play to Earn platform has managed to raise $679,428 in stage 2 of its presale. MEMAG is currently available to investors for $0.01, which could increase in later stages.

ESTUARY

skulls, like Meta Master’s Guild, is also a Play to Earn platform where players can play Duels of Eternity, an online card game. Players are supposed to first purchase a deck of cards using RIA (Calvaria’s internal currency) to start playing Duels of Eternity. The game offers exciting prizes to players in the form of RIA tokens that they can use to upgrade and buy new cards. The game can be accessed through both mobile phone and PC.

With 12 days to go until stage 5 of its pre-sale ends, Calvaria has successfully sold 93% of the issued tokens. The platform has managed to raise $2.86 million so far.

FGHT

To struggle is a blockchain-based health app that rewards its users for completing exercises and other tasks. The platform also offers a free live session to its users upon registration. Users are supposed to enter their physical and goal details, which the platform then uses to create custom tasks for them. The platform ensures the completion of these tasks through the use of sensors in the application. Tokens can be used to purchase merchandise or cashed out for profit.

Previously available at $0.016, FightOut’s price has doubled as it enters a new stage of its pre-sale. Prices are set to rise further as the coin is supposed to make its CEX debut on April 5.

Conclution

Bitcoin, despite losing 2.17% in the last 24 hours, stands above the $20,000 mark. With a decrease in inflation, the coin is supposed to cross $22,000 and grow further along with the entire cryptocurrency market.

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