and other cryptocurrencies were sharply lower Wednesday, falling alongside stocks amid wider market worries. Digital asset prices were below key technical levels, suggesting that further declines could be coming.
The price of Bitcoin has dropped 5.5% over the past 24 hours to $57,800, having previously traded close to $56,500—some $10,000 below its 50-day moving average around $66,500, which is a sign of significant technical market weakness. The largest digital asset was holding near $62,000 as recently as Tuesday before selling off, with prices now far below the mid-March all-time high near $74,000.
“Technical downside targets now look to be $55,700 (61.8% Fibonacci retracement of the rise since October) and the $51,000 to $52,000 area (late January consolidation area),” said Alex Kuptsikevich, an analyst at broker FxPro.
U.S. macroeconomic news was in the spotlight after tokens tumbled on Tuesday in tandem with the
and the rest of the stock market. Bitcoin has shown itself to be correlated to other risk-sensitive assets like stocks, and is similarly vulnerable to the outlook for interest rates, which have a bearing on investor appetite for risk.
“Bitcoin’s status as a so-called ‘risk asset’ has been underlined amid a turbulent past 24 hours of trading that has witnessed a substantial pullback across the cryptocurrency market,” said Arthur Firstov, chief business officer at blockchain payment group Mercuryo. “As we see steep falls in the prices of leading digital tokens … the cryptocurrency space could even be a bellwether for conventional markets ahead of today’s policy decision from the Fed.”
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The dominant narrative in markets remains the persistence of inflation and the outlook for interest rates, with investors worried that sticky price-growth will see the Federal Reserve keep rates at a generational high for longer than once thought. Economic data on Tuesday raised hackles about inflation and led to the market selloff as other catalysts loom, including a Fed rate decision and press conference from Fed Chairman Jerome Powell on Wednesday before the key U.S. jobs report on Friday.
“Both [the Fed decision] later today and monthly jobs data on Friday have enough potential to accelerate or reverse the downtrend [in Bitcoin],” Kuptsikevich said.
Beyond Bitcoin,
—the second-largest crypto by market cap—fell 4% to $2,900. Smaller tokens also were weaker, with
sliding 5% and
retreating 1%. Memecoins were further in the red, with
down 8% and
shedding 7%.
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Write to Jack Denton at jack.denton@barrons.com
Read More: Bitcoin Plunges. Here’s Why and How Far Prices Could Fall.
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