This year began with a market downturn that caused most cryptocurrencies, including Bitcoin and Ethereum, to drop sharply.
Bitcoin has been trying to reverse the downtrend, but any bullish correction has failed to push the price above the $45,000 mark. Today BTC fell more than 4%, slipping below $44,000.
At the time of writing, Bitcoin was trading at $43,609.63.
Why Bitcoin’s price is falling
Bitcoin’s price has been volatile since it fell below $40,000 in January following the Federal Reserve’s announcement of planned interest rate hikes in the coming months. Earlier reports showed U.S. annual inflation reaching a 40-year high of 7%, prompting the first rate increase in more than three years.
Currently, Bitcoin’s immediate support level sits at $42,578. The asset needs to reclaim $44,208 before it can retest resistance near $45,161. If it breaks below the support level, it could slide toward $41,625, which would be a significant setback for the world’s leading digital asset.
The crypto market is in decline
Today Bitcoin’s drop dragged other cryptocurrencies down with it. For example, Ethereum fell about 5% and was trading around $3,097.40.
Some altcoins recorded even larger losses. Both XRP and Polkadot (DOT) declined more than 9% over the past 24 hours. Solana (SOL) also dropped about 8% to $106.15.
The sudden downward movement shaved roughly 3% off total market capitalization, declining from just over $2 trillion to approximately $1.943 trillion.
Despite the pullback, Bitcoin investors remain optimistic and believe the coin will resume its bullish trend soon.