Bitcoin couldn’t hold onto the crucial $19,000 over the weekend and plunged towards the $18,000 mark after breaching the support line. Ethereum hasn’t been able to make many gains following the historic Merge. In fact, Ether is leading the losses in the crypto market.
Last week saw a brief rally above $20,000 by Bitcoin but it was shortlived. On Saturday, the popular cryptocurrency slipped to its lows. At the time of writing this article, Bitcoin was trading at $18,797, as per data from CoinMarketCap. It lost 6.10% in the last 24 hours. Ethereum, down by 10.37%, was changing hands at $1,301. In the last seven days, the top two cryptocurrencies have recorded significant losses, Bitcoin 13.08% and Ethereum 24.47%.
The altcoins are also down. Polygon MATIC is the biggest loser. It’s down by 10.13% in the last 24 hours. Cardano ADA lost 9.73% of its value, Polkadot 9.41%, Solana 8.07%, and XRP 7.36%. The memecoins are also in the doldrums – Shiba Inu lost 10% of its value in the last 24 hours, and the world’s leading “joke coin” Dogecoin is down by 7.71%.
The global crypto market continues with its vulnerability and volatility to the same macroeconomic forces that have hit stocks and other riskier assets for most of the year now. Data shows that Bitcoin remains closely correlated to the S&P 500. The crypto market will experience more pain if the correlation continues. Analysts say aggressive rate hikes could trigger a 26% fall in the S&P 500. Investors are awaiting the Federal Open Market Committee’s (FOMC) decision on a fresh interest rate hike this week. A minimum 75 basis point increase is expected.
Joe DiPasquale, CEO of BitBull Capital, outlined that Bitcoin’s relief rally was unsustainable and it gave up a lot of its gains after the CPI data came out higher than expected, and the ETH Merge became a mere “sell-the-news-event”. He believes the upcoming FOMC will be a key point for the markets as participants price in a 75 basis points rate hike, while some expect even more hawkish measures. But DiPasquale is optimistic. He says any signs of dovishness in the FOMC meeting will most likely give the market a strong push-up. There could be a short-term bottom forming if the price drops any further because of the 75 basis points hike.
Edward Moya, Oanda Senior Market Analyst, says the US government remains concerned about the potential risks of crypto. He said regulatory agencies see increased enforcement actions as an important measure. The analyst added that President Joe Biden’s executive order on cryptocurrencies has been six months but the legislation hardly puts anything major in motion.