Bitcoin (CRYPTO: BTC) has plummeted today, as it failed to hold $23,000 as support, which is a key level as mentioned previously. There was not an independent catalyst which led to the heavy selling pressure, but the S&P 500 rejecting and failing to continue its recovery contributed to Bitcoin’s drop. Furthermore, Bitcoin broke a key upwards-sloping trendline (which dates back to the bottom in June), indicating a significant move to the downside was imminent from a technical perspective.
There is a general consensus for market participants that consumption is starting to slow. Walmart (NYSE:WMT) CFO Rainey spoke about the adjustment of spending behaviour from their customers. He said:
"Instead of buying maybe deli meats or beef, they're trading down to things like canned tuna, chicken and, even, beans. We're seeing the same thing in the quantity, where they're trading down for smaller pack sizes that are more affordable. So instead of buying 12 items to buy six items in a pack"
"We expect inflation to continue to influence the choices that families make, and we're adjusting to that reality"
Risk assets struggle during periods of high inflation coupled with consumer weakness, hence leading to the recent selling pressure for Bitcoin and the crypto market.
Nonetheless, institutional investment continues to pour into the crypto space. Between 2021 and 2022 investment has increased from $3.6 billion to $21.6 billion, including the biggest tech giants. The company behind Google, Alphabet (NASDAQ:GOOGL), has remarkably invested $1.5 billion into blockchain and crypto firms, such as Fireblocks, Dapper Labs, Voltage and the Digital Currency Group.
Despite the macroeconomic downturn resulting in lower prices in the short term, the most adopted crypto projects won’t stay cheap for long.
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