Bitcoin
Bitcoin Plunges as Correlation with Nasdaq Continues
Bitcoin price continued plunging on Friday as correlation with American stocks continued. BTC dropped to a low of $16,800, the lowest level since December 8. It has slumped by more than 8% from the highest level this week. Other cryptocurrencies like Dash, Monero, and Hooked continued falling.
Stocks and cryptocurrencies correlation
Cryptocurrency prices have an on-and-off relationship with American stock indices like the Dow Jones and Nasdaq 100. In most cases, Bitcoin prices tend to drop when American shares are rising and vice versa.
After rising sharply in the past few months, American indices have plunged sharply in the past few days. The Nasdaq 100 index has plunged by more than 8% from the highest level in December. Similarly, the Dow Jones and S&P 500 indices have crashed by over 5%.
This decline happened as investors reacted to the latest interest rate decision by the Federal Reserve. In its December meeting, the bank decided to hike interest rates by 50 basis points after hiking rates by 75 basis points in the past four straight meetings.
The main catalyst for Bitcoin and American stocks was the statement by Jerome Powell. In his statement, the Fed Chair said that the Fed was still in its fight against inflation. In that, he will continue hiking interest rates by another 75 basis points in 2023.
This means that the Fed will likely hike rates by 50 basis in its February, its first meeting of the year. It will then deliver another 0.25% rate hike in March, which will push interest rates to the highest level in decades.
Therefore, Bitcoin price and stocks dropped as investors reacted to a potential recession as the Fed gets aggressive in a period of slow growth. However, on the positive side, in reality, financial assets tend to do well during a recession since the Fed tends to to sound dovish in such a period.
Bitcoin price forecast
The 4H chart shows that Bitcoin price has been in a strong bearish trend in the past few days following the Fed decision. As it collapsed, it moved below all moving averages while oscillators continue falling. It is nearing its oversold level.
Therefore, there is a likelihood that the BTC price will resume the bullish trend as the shakeout eases. If this happens, the next key support level to watch will be at $17,000.
Bitcoin price dumped hard on Monday, briefly slipping below $41,000, erasing gains recorded in the previous week. The premier cryptocurrency seems to have exhausted its recent rally propelled by industry vulnerabilities. At the time of writing, the world’s largest cryptocurrency was trading slightly lower at $41,385. Bitcoin’s total market cap has dipped by 2% over the past day, while the total volume of BTC tokens traded over the same period climbed by 58%.
Fundamentals
Bitcoin price has been facing retracements and a rollercoaster over the past few days after recently rocketing to a 20-month peak. On-chain data has suggested that many investors used the opportunity to take some profits, leading to a decline in the asset’s price.
Bitcoin’s price slump is mirrored in the wider crypto market, with the global crypto market cap decreasing by 1.85% over the past 24 hours to $1.55 trillion. The total crypto market volume has increased by 32% over the same period. The Crypto Fear and Greed Index has plunged from a level of extreme greed to a greed level of 70, suggesting a decline in risk appetite.
Ethereum, the largest altcoin by market capitalization, is currently trading at $2,167, down almost 3% for the day. Meme coins have been hit hard by the market slump, with Dogecoin and Shiba Inu down by more than 4% over the last day.
Last week on Thursday, cryptocurrency experts took notice of…
Bitcoin price edged lower on Thursday despite optimism in wider markets on the back of the Fed’s interest rate decision. The flagship cryptocurrency has been consolidating above the critical level of $42,000 after briefly topping $44,000, its highest level in 20 months. Bitcoin was trading 0.71% lower at $42,569 at press time. BTC’s total market cap has increased by more than 3% over the last day to $832 billion, while the total volume of the asset traded over the same period jumped by 22%.
Economic Outlook
Bitcoin price has been trading sideways over the past few days, suggesting a pause in its recent rally towards $45,000. The premier cryptocurrency has decreased by 4% in the past week but remains 15.22% higher in the month to date. The digital asset has staged a significant recovery this year after a torrid 2022 in which a string of scandals, including the collapse of FTX, led to a market meltdown, undermining the credibility of the sector.
The crypto market has been buoyed by the Fed’s latest interest rate decision. The US Federal Reserve on Wednesday held its key interest rate unchanged for the third consecutive time, in line with market expectations. With the easing of the inflation rate, members of the Federal Open Market Committee (FOMC) voted to keep the benchmark overnight borrowing rate in a targeted range between 5.25%-5.5%.
Additionally, the central bank indicated that three rate…
Bitcoin price has been hovering above the $43,000 psychological level over the past two days amid anticipation about the potential approval of a spot bitcoin ETF. The flagship cryptocurrency has climbed more than 16% in the past week and nearly 170% in the year to date. Bitcoin’s total market cap has increased by nearly 5% over the past 24 hours to $858.9 billion, while the total volume of the token traded rose by 43%. The Bitcoin price was trading at $43,914 at press time.
Fundamentals
Bitcoin price has posted significant gains over the past few days, climbing to its highest level since April 2022, before the crash of a stablecoin that started a litany of company failures, pummeling crypto prices. The world’s largest cryptocurrency briefly topped the crucial level of $44,000 on Wednesday amid rising momentum despite being massively overbought.
According to analysts, with no spot bitcoin ETF approvals yet and the halving event five to six months away, the market is riding on FOMO. Capital has been flowing in the Bitcoin market amid enthusiasm that the launches of spot ETF will bring in billions of dollars of new investment into the crypto sector.
Investors have already started providing capital as seed money for ETF products. Notably, a recent report by CoinDesk showed that the world’s largest fund manager, BlackRock, received $100,000 in capital from a seed investor for its spot bitcoin exchange-traded fund…
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