Bitcoin is falling. The Fed decision could mean “All bets are off” for cryptos.
Bitcoin
and other cryptocurrencies fell on Tuesday as crypto traders eyed the next Federal Reserve monetary policy decision due on Wednesday. Extending recent declines, digital assets look vulnerable to more losses.
The price of Bitcoin has fallen 1.5% over the past 24 hours to below $28,100, continuing to fall further from the key $30,000 level and extending a slide since Sunday when the largest crypto traded around $29,750. Although Bitcoin remains up around 70% so far this year, it has struggled to consolidate gains above $30,000, a point it reached last month for the first time since June 2022.
“Investors are focused on what the Fed does on Wednesday,” said Antoni Trenchev, co-founder and managing partner at crypto lender Nexo. “If the Fed indicates it is not done raising rates, all bets are off for crypto and other risk assets.”
In fact, as in the stock market, investors are waiting for the next interest rate decision from the Fed, with
Dow Jones Industrial Average
and
S&P 500
starts the week lower. Inflation-fighting interest rate hikes over the past year have hammered both crypto and stocks, and while Bitcoin’s 2023 rally has come amid expectations of easier monetary policy, this narrative remains vulnerable. But even as traders prepare for a more hawkish Fed, there is room for a dovish surprise that could spark gains.
“If the Fed suggests it’s done with rate hikes, that should galvanize the bulls and revive the bull run,” Trenchev said.
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Nonetheless, crypto traders are bracing for near-term downside, with Bitcoin prices nearing key technical levels and price dynamics signaling a weakening of bullishness that has kept prices up near 11-month highs.
“Worryingly, we have seen a series of falling highs over the past three weeks, and significant downward momentum is building faster and faster,” said Alex Kuptsikevich, analyst at broker FxPro.
As Bitcoin moves further from the $30,000 level, it risks accelerating losses as the technical backdrop weakens – but that doesn’t mean a long-term reversal from the depths of the “crypto winter” bear market is out of the question.
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“Bitcoin is retesting its 50-day moving average around $28,100 and looks at risk of breaking down … we remain short-term bearish,” said Katie Stockton, managing partner at technical research firm Fairlead Strategies. “We expect Bitcoin to pull back towards key support near $25,200. Long-term resistance for Bitcoin is around $35,900, a level that looks achievable in the months ahead, assuming the breakout point holds around $25,200.”
Beyond Bitcoin,
Ether
—the second largest crypto lost 1% to close to $1,850. Smaller cryptos, or altcoins, showed more of the same, with
Cardano
down 1% and
Polygon
miss 2%. Memecoins were also weaker, with both
Dogecoin
and
Shiba Inu
reduction 1%.
Write to Jack Denton at [email protected]
