Bitcoin fell below $37,000 in the short term to a 2.5-month low. The founder of Fairlead Strategies said the next support level is $27,200

After the U.S. stock market gave up the gains after the Federal Open Market Committee (FOMC) meeting on Wednesday, the crypto market also plummeted. Bitpush terminal data showed that in the past 24 hours, Bitcoin once fell to $36,520, almost the lowest price in two and a half months. Katie Stockton, founder of independent market research and analysis company Fairlead Strategies, believes that the trend of Bitcoin has broken and $27,200 may be the next support level.

Coinglass data shows that as of press time, nearly $200 million in funds were liquidated in the crypto market in the past hour alone.

Bitpush previously reported that on May 4, the Federal Reserve announced a 50 basis point rate hike, the largest rate hike in 22 years. Fed Chairman Powell hinted that a further 50 basis point rate hike would be made later this year, and a 75 basis point rate hike was unlikely. At the time, Bitcoin and stock markets reacted positively, each rising by nearly 3%.

However, the optimism appeared to be short-lived: the S&P 500 gave up all of its gains on Thursday, falling nearly 4% on the day. Meanwhile, Bitcoin began to plunge at approximately 13:20 UTC, falling from around $39,400 to below $37,000 in 2 hours.

Amid the plunge, Luna Foundation Guard (LFG), a Singapore-based nonprofit organization, announced that it had purchased another 37,863 BTC worth $1.5 billion in an effort to further bolster its stablecoin reserves.

The transaction included a $1 billion over-the-counter transaction with Genesis and the purchase of $500 million in BTC from Three Arrows Capital. As of May 5, 2022, LFG's total Bitcoin holdings reached 80,394, making it one of the top ten BTC holders in the world.

Do Kwon, co-founder and CEO of Terraform Labs , which launched the Terra blockchain, said he expects to reach the $10 billion reserve target by the end of the third quarter.

Earlier in mid-March, as news of Terra’s massive Bitcoin purchases circulated, BTC broke through $48,000 for the first time since December 31, and Luna hit a record high.

Joel Kruger, crypto strategist at LMAX Group, commented: “Corporate purchases of Bitcoin can dramatically impact the value of the currency and the space itself. As institutional demand increases, so does liquidity and long-term interest, validating the asset class.”

But from a macro perspective, some professionals are unsure whether the gains can be sustained, given that the Federal Reserve has embarked on its most intense tightening cycle in decades.

Terra blockchain’s governance token Luna fell 4.8% on Thursday as the market-wide sell-off wiped out $1.3 billion from its market value. Bitcoin’s decline also made LFG’s $1.5 billion acquisition now worth $1.4 billion.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, wrote in a LinkedIn post that despite a brief rebound in risk assets after the rate meeting, "hawkish Fed expectations may not allow bulls to control the market."

Katie Stockton, founder and managing partner of Fairlead Strategies, said in a recent episode of CNBC Squawk Box that she believes Bitcoin's upward trend has been broken, there is a strong correlation between Bitcoin and the Nasdaq 100 index, and it is expected to start falling along with the stock market.

Citing the Fibonacci technical indicator, Stockton believes that $27,200 is the next possible support level for Bitcoin.