Bitcoin falls briefly below $ 30,000 as cryptocurrency sales continue
Bitcoin rose to new heights in 2021 when companies such as Tesla and Mastercard went up to crypto. But with regulators circling in, the path ahead is likely bumpy.
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Bitcoin fell on Tuesday, dipping below the $ 30,000 key level at a time when the cryptocurrency’s recent sales resumed.
The price of bitcoin was last down less than 1% to $ 31,139.83, according to Coin Metrics. Earlier in the day, it had fallen as low as $ 29,207.77, after gaining more than 4% in the previous session to trade above $ 31,000.
Ether also reversed previous losses and traded less than 1% lower at $ 1,850.36 on Tuesday. Previously, it fell to as low as $ 1,725.01.
The move followed a report that the Securities and Exchange Commission is investigating the possibility that the BNB token, a cryptocurrency issued by Binance, could be categorized as a security. BNB led the market-wide sales. It is now down 6%.
Bitcoin has lost more than half of its value from a record high of $ 68,982 reached in November. The digital token had suffered eight straight weeks of losses and fell below $ 30,000 last month after the Terra collapse.
Cryptocurrencies have moved in line with equities, which have had a tough year amid fears of rising prices, rising inflation and the risk of a slower economy or direct recession. The S&P 500 has fallen more than 13% in 2022, while the technology-heavy Nasdaq Composite has been hit harder, down 23% this year.
“BTC’s increased correlation with equity, stagnant transaction growth … and the emergence of ETH as a value store may weaken BTC’s dominance,” Bernstein analyst Gautam Chhugani said in a recent note.
Still, some on Wall Street are seeing a rise in bitcoin on the horizon. JPMorgan’s Nikolaos Panigirtzoglou said last month that he sees about 30% upside for the cryptocurrency after the recent washout.
Bitcoin faces another obstacle this week with the closely monitored consumer price index, which comes out on Friday. If the reading for May is cooler than the April figures, as expected, some may interpret this as a sign that inflation has reached its peak.
Some Fed members have said that interest rate hikes could continue beyond this summer, noted Yuya Hasegawa, a crypto-market analyst at the Japanese bitcoin exchange Bitbank. If the CPI picks up again in May, the market will begin to price in that scenario and may cause a shock to risk assets, he said.
“How much a 50 bp rate hike from the Fed in May could suppress prices remains uncertain,” Hasegawa said. “So it will be difficult to open new positions before Friday’s KPI announcement. In other words, bitcoin may continue to swing sideways until then, but the market should prepare for impact.”
