Bitcoin
and other cryptocurrencies were falling Tuesday as crypto traders eyed the next monetary policy decision from the Federal Reserve due Wednesday. Extending recent declines, digital assets look vulnerable to more losses.
The price of Bitcoin has declined 1.5% over the past 24 hours to below $28,100, continuing to fall further from the key $30,000 level and extending a fall since Sunday when the largest crypto traded around $29,750. Though Bitcoin remains up some 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 Wednesday,” said Antoni Trenchev, co-founder and managing partner at crypto lender Nexo. “If the Fed indicates its not done raising rates, all bets are off for crypto and other risk assets.”
Indeed, as in the stock market, investors are awaiting the next interest-rate decision from the Fed, with the
Dow Jones Industrial Average
and
S&P 500
starting the week lower. Inflation-fighting rate hikes over the past year slammed cryptos and stocks alike, and while the rebound in Bitcoin in 2023 has come amid expectations of easier monetary policy, that narrative remains vulnerable. But even as traders brace for a more hawkish Fed, there is room for a dovish surprise that could kick-start gains.
“If the Fed suggests it’s done with rate hikes, it should galvanize the bulls and reignite the bull run,” Trenchev said.
Nevertheless, crypto traders are bracing for declines in the near term, with Bitcoin prices getting closer to key technical levels and price dynamics signaling a weakening in the bullishness that has kept prices buoyant near 11-month highs.
“Worryingly, we have seen a series of declining tops in the last three weeks, and significant downside momentum is building faster and faster,” said Alex Kuptsikevich, an 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 that a long-term reversal from the depths of the “crypto winter” bear market is out of the question.
“Bitcoin is retesting its 50-day moving average around $28,100 and looks at risk of breaking lower … we remain short-term bearish,” said Katie Stockton, managing partner at technical research firm Fairlead Strategies. “We expect Bitcoin to pull back toward key support near $25,200. Long-term resistance for Bitcoin is at 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 near $1,850. Smaller cryptos, or altcoins, exhibited more of the same, with
Cardano
down 1% and
Polygon
slipping 2%. Memecoins were also weaker, with both
Dogecoin
and
Shiba Inu
shedding 1%.
Write to Jack Denton at [email protected]
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