Bitcoin
and other cryptocurrencies slipped again on Wednesday, falling further from key levels amid a deepening correction from the peak of a rally that has buoyed digital assets so far this year.
The price of Bitcoin has fallen 1% over the past 24 hours to around $26,850, the lowest level for the largest crypto since a brief dip last week and, before that, early March, when prices rose from below $21,000.
Bitcoin reclaimed the psychologically important $30,000 zone in April—for the first time since last June, when the crypto selloff accelerated into a brutal bear market—but failed to consolidate those gains and has since corrected. Still, Bitcoin is up by almost two-thirds this year amid a rally from multi-year lows hit in the wake of crypto exchange FTX’s late-2022 bankruptcy.
“One can discern a moderately upward trend on Bitcoin’s intraday charts, but it’s worth noting that the price is failing to push up from that local support, which now passes near $27,000,” said Alex Kuptsikevich, an analyst at broker FxPro. “Traders should be prepared for a price decline into the $25,000 area, as the market seems set for a full rally correction from the November lows.”
An uncertain macroeconomic backdrop—which has also created volatility in the stock market for the
Dow Jones Industrial Average
and
S&P 500
in recent days—isn’t helping. The looming U.S. debt ceiling and the challenges over reaching a deal to avoid default, as well as rising global economic growth concerns, have been weighing on sentiment across risk assets this week.
A number of officials from the Federal Reserve this week also have challenged market expectations that the central bank may be on the brink of cutting interest rates this year, undoing a narrative that has helped carry cryptos higher in 2023.
“Rising U.S. Treasury yields [as a result of debt ceiling negotiations] have been pressuring Bitcoin’s upside potential. Furthermore, multiple regional Fed presidents have expressed on Tuesday that there may be additional rate hikes if necessary,” said Yuya Hasegawa, an analyst at crypto exchange Bitbank.
Bitcoin, like tech stocks on the
Nasdaq Composite,
is highly sensitive to swings in long-term Treasury yields, which represent safe returns from U.S. government debt. When yields move higher, it makes the returns from far riskier assets, like cryptos, less attractive, and tends to weigh on prices. Soaring yields in 2022—a function of the dramatic rise in interest rates—were a key factor behind the big selloff in Bitcoin.
Beyond Bitcoin,
Ether
—the second-largest crypto—lost 1% to $1,800. Smaller cryptos or altcoins exhibited more of the same, with
Cardano
and
Polygon
each down near 1%. Memecoins were more mixed, with
Dogecoin
gaining 2% and
Shiba Inu
shedding 1%.
Write to Jack Denton at jack.denton@barrons.com
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