In late March, Bitcoin reached a peak of just over $48,000, but has since been dragged lower by concerns about tighter monetary policy.
For the first time since March 23, bitcoin briefly fell below US$42,000 (S$57,000) due to rising interest rates, returning to the range it has traded since the beginning of the year. For the sixth consecutive day, the largest cryptocurrency fell as low as $41,918 in Asia on Monday morning (April 11).As a result of concerns about tighter monetary policy, Bitcoin – and other tokens – have dropped since they peaked well above US$48,000 late in March. Even the Bitcoin 2022 conference in Miami last week failed to halt the decline.
According to economists surveyed ahead of data due Tuesday, U.S. inflation likely accelerated to 8.4% in March, the highest rate since early 1982. Federal Reserve rates may have to be raised above 4%, Goldman Sachs Group Inc. Chief Economic Officer Jan Hatzius said Friday.
The expectation of tighter monetary policy has weighed on demand for riskier assets such as cryptocurrencies and tech stocks, which are increasingly moving together. Other top tokens also fell on Monday, with Polkadot down 8.7% and Ether falling 7.9%.
After the Bitcoin 2022 sugar rush fades, Tuesday’s (likely) ugly U.S. consumer price report reinforces the Fed’s predicament in tackling runaway inflation without choking the economy, said Antoni Trenchev, managing partner of crypto lender Nexo in an email statement.
Also, Bitcoin’s 50-day moving average fell below its current level. The token was trading at $41,263 at 7:41 a.m. in New York, down 2.6% for the day. U.S. equity futures were lower, while the Chinese markets fell sharply.
Bitcoin has been in a trading range of around $35,000 to $45,000 for much of the year so far. A breakout above $48,000 last month briefly erased its losses for the year, but the token hit resistance around its 200-day moving average.
Miller Tabak + Co. Chief Market Strategist Matt Maley said he doesn’t see the sell-off as particularly concerning.
Maley said in an emailed statement that the pullback from the March high was more technical than anything else. Bitcoin had become overbought after its 35% rally from January to late March. Since then, it has been working off that condition. The multi-month upward trend will remain intact as long as it holds above $40,000.”
After a tough week for American markets, Bitcoin tends to follow U.S. tech stocks, which makes the drop less surprising. Correlations with the Nasdaq 100 Index are now at record levels.
Nexo’s Trenchev noted that the Nasdaq 100 closed below its 50-day moving average on Friday, so now would not be a bad time for Bitcoin to break its correlation with the tech-laden index. Getting close to $45,000 again will put us back in the game.”
Via this site.
Author
Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
