Bitcoin Falls Below $19,000. Why a Big Move May Be Coming.

BitcoinBTCUSD –4.79%  traded a new one-year low on Monday and other cryptocurrencies followed it lower ahead of what’s expected to be the third straight outsize interest rate hike from the Federal Reserve when the central bank meets this week.

Bitcoin has fallen to $18,688, down 6.1% over the past 24 hours, according to CoinDesk. The world’s largest cryptocurrency has declined almost 60% this year. It came off earlier lows that had Bitcoin trading at levels last seen in December 2020.

EtherETHEUR –3.69% , the second-largest crypto, has declined more than 8% over the past 24 hours to $1,307. The native token of the Ethereum blockchain network last week completed its highly anticipated upgrade known as “The Merge.” The upgrade, however, has been overshadowed by macro factors, including renewed fears around inflation and the prospect of a recession.

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Also adding to nervousness around cryptos was the White House’s unveiling last week of the Biden administration’s plans to regulate the industry, said Edward Moya, senior market analyst at Oanda.

“Bitcoin is lower following the selloff in equities as risk appetite remains in hiding,” Moya said last week as equities tumbled following hotter-than-expected inflation data, an earnings warning from FedEx FDX –21.40%  (ticker: FDX), and anticipation by Wall Street that the Fed will boost interest rates by 75 basis points for the third straight policy meeting in its effort to tame inflation. The Fed’s decision on rates is expected Wednesday afternoon.

Rick Bensignor of Bensignor Investment Strategies notes that open interest in Bitcoin futures has risen by 20% over the past few months, with the crypto doing very little over that time period. “That means a big move is in the works,” he writes.

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Crypto-related stocks followed Bitcoin lower on Monday. Coinbase COIN –4.18%  (COIN) was down 4.6%, Marathon Digital (MARA) declined 4.9%, and Riot Blockchain RIOT –9.96%  (RIOT) fell 4.4%.

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