Bitcoin Price Faces Double Trouble Amid SpaceX’s Write-Down and Fed Rate Concerns

Bitcoin price has been in a steep freefall over the last few days on the back of a wave of risk aversion throughout world markets and concerns about the Fed’s interest rate path. Bitcoin, the largest cryptocurrency by market capitalization, has crashed by more than 10% over the past week to its lowest level since June 2023. The asset’s total market capitalization has slumped by 7.27% to $514 billion over the last day, while the total volume of BTC traded over the same period jumped by more than 107%.

Fundamentals

Bitcoin price has been in the red for the past few days amid economic uncertainty and a decline in the crypto market sentiment. The global cryptocurrency market cap has decreased by 6.12% over the past 24 hours to $1.06 trillion, while the total crypto market volume increased by more than 97%. Bitcoin’s dominance has also slipped over the same period to 48.46%.

Most altcoins, including Ethereum, the largest altcoin by market cap, have been in a steep downward trajectory for the past few days. Among the worst performers in the crypto market are XRP, Cardano, Solana, Polygon, Litecoin, Shiba Inu, Avalanche, and Bitcoin Cash, which have all dropped by more than 10% each.

The Crypto Fear and Greed Index, which measures the sentiment of the cryptocurrency market participants on a scale from 0 to 100, shows that the market is in extreme fear. At press time, the index reading was at a Fear level of 37, down from a neutral level of 50 two days ago. A Fear level usually shows that investors have started selling irrationally.

The dollar is headed for a fifth winning streak against its major peers, the longest streak seen in 15 months. The US dollar index, which measures the performance of the greenback against six developed market rivals, including the Euro and Yen, has climbed to 103.52. A stronger dollar is usually bearish for assets such as stocks and cryptocurrencies.

Catalysts Behind BTC’s Decline

The Bitcoin price selloff came several hours after the Wall Street Journal reported that SpaceX, owned by Elon Musk, wrote down the value of Bitcoin it owns by a total of $373 million in 2022 and 2021, and sold its holdings of the virtual currency. According to researchers and analysts, the company’s move is the most brutal minute-by-minute selloff ever seen in the history of Bitcoin.

In 2022, Tesla Inc, which is also owned by Elon Musk, announced that it had sold 75% of the Bitcoin it had purchased, a little more than a year after investing $1.5 billion in the digital currency. Tesla also recorded about $101 million of Bitcoin charges in 2021, when it sold some of its holdings. Elon Musk has historically been a vocal supporter of the crypto industry.

Bitcoin price has also been under intense pressure due to the uncertainty around the Fed’s monetary policy path. FOMC meeting minutes released earlier this Wednesday pointed to the possibility of further interest rate hikes. During the two-day policy meeting in July, policymakers noted that inflation remains too high and further monetary policy tightening might be needed to ease pressures from higher prices.

Bitcoin Price Technical Analysis

The daily chart shows that the Bitcoin price has been on a bearish trajectory for the past few days, crashing to its lowest level in two months. At the time of writing, Bitcoin was trading lower at $26,500. The digital asset has dropped below the 50-day and 200-day exponential moving averages, as well as the 50-day and 100-day simple moving averages. Its Relative Strength Index (RSI) dropped to the oversold region at 20.

Therefore, the Bitcoin price is likely to continue falling in the ensuing sessions amid economic uncertainty and a decline in market sentiment. As such, the BTC price is likely to drop further to the immediate support level of $25,800. However, a flip above the 200-day EMA at $27,265.50 might pave the way for more upside.

BTC Price Chart