Bitcoin
and other cryptocurrencies were falling Thursday, finally making significant moves after weeks of inaction as traders sold digital assets amid expectations that interest rates will remain higher for longer than once thought.
The price of Bitcoin has dropped 2% over the past 24 hours to $28,500. It’s volatile action characteristic of the largest crypto that largely has been absent in recent months as Bitcoin has languished between $29,000 and $30,000 in a lull of historically low volatility.
“Bitcoin investors have been searching for a trigger to extricate it from its low-volatile sideways snooze fest; now comes the true test of resilience—and nerves—as Bitcoin falls to the bottom of its almost two month trading range,” said Antoni Trenchev, co-founder and managing partner at crypto lender Nexo.
Like the stock market, where the
Dow Jones Industrial Average
and
S&P 500
have seen two days of significant declines, Bitcoin is moving on the back of economic data and the latest meeting minutes from the Federal Reserve’s monetary policy committee.
U.S. economic data releases this week—from retail sales, industrial production, and other metrics—have reinforced the narrative of a strong economy, with forecasts for third-quarter gross domestic product growth also being upgraded. In addition, minutes released Wednesday from the Fed’s policy decision in June confirmed a continued commitment to bringing inflation down with higher rates.
A strong economy gives the Fed little incentive to lower interest rates from generational highs, and investors are also increasingly anticipating more rate hikes from current levels. Rates cranking higher since March 2022 have been a key force on risk-sensitive assets like stocks and Bitcoin, so the latest news is bad for cryptos.
How far could Bitcoin fall now that it has been jolted back into action?
“The fall below $28,800 confirmed the local dominance of the bears. The following key support points are now at the next round level of $28,000 and then at the $27,200 area, where the 200-day moving average and uptrend support from last November are centered,” said Alex Kuptsikevich, an analyst at broker FxPro.
Beyond Bitcoin,
Ether
—the second-largest crypto—dropped 2% to $1,790. Smaller tokens, or altcoins, also fell, with both
Cardano
and
Polygon
slipping some 1%. Memecoins were weaker, with
Dogecoin
down 3% and
Shiba Inu
shedding 8%.
Write to Jack Denton at [email protected]
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