Bitcoin briefly dips to 3-month low as risk assets continue to get crushed
Ether has vastly outperformed bitcoin since both cryptocurrencies bottomed in June 2022. Ether’s superior gains have come as investors anticipate a major upgrade to the ethereum blockchain dubbed the “merger.”
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Bitcoin fell to a three-month low on Monday as investors dumped risky assets amid expectations of higher interest rates.
The world’s largest cryptocurrency fell as much as approx. 5% to hit an intraday low of $18,276, its lowest level since June 19, according to Coin Metrics. It was last down 1.2% at $19,465.00. Bitcoin is down 3.77% this month and on pace for its second consecutive negative month after plunging 15% in August.
“Regulatory pressures, rising base rates and inflation are pushing riskier asset classes, especially crypto, forcing liquidations, reducing capital available for investment and increasing concerns over undefined regulatory controls,” said Sadie Raney, co-founder and chief operating officer of Strix Leviathan. “These forces may dampen the overall crypto complex until the financial system stabilizes and a regulatory framework becomes clearer.”
Ether also fell a similar 5% to $1,281 apiece on Monday, hitting its lowest level since July 15. It was last lower by 1.6% at $19,465.00. It is currently down -13.8% this month, on track to post its worst month since June.
Risk assets have been under massive pressure as the Federal Reserve is expected to stick to its aggressive tightening plan. The central bank is widely expected to approve a third consecutive interest rate increase of 0.75 percentage points this week, which will take benchmark interest rates up to a range of 3%-3.25%.
“Retail buyers take a long-term view of bitcoin while institutional traders treat digital assets like technology stocks and adopt a short-term mentality that contributes to the selloff we’re seeing,” said Chris Kline, chief revenue officer and co-founder of Bitcoin IRA. “Fed’s tightening policy strengthens dollar and weighs down risk assets overall.”
So-called “whales” — institutions, miners or other holders of large amounts of bitcoin, typically with more than 1,000 bitcoins in a wallet — have hedged the macro state and sold the coins since June, according to Julio Moreno, senior analyst at blockchain analytics firm CryptoQuant.
That is evidenced by the increasing amount of coins being sent to exchanges and dumped on retail investors, who believe bitcoin is bottoming out at these levels, when in fact it has further to go, he said.
CryptoQuant data shows that bitcoin has bottomed between $10,000 and $14,500 this cycle.
— CNBC’s Gina Francolla contributed to this report.
