Bitcoin continues to trade in a narrow range between $18,000 and $24,000, which keeps investors on edge about where the price is headed. The market for crypto-currencies has experienced a number of problems, ranging from project collapses to bankruptcies.
Bitcoin traded below $19,000 on Wednesday morning, hitting its lowest level since June, on the back of falling stock markets globally and continued strength in the US dollar.
The value of the entire cryptocurrency market also fell below the $1 trillion mark as digital coins saw widespread selling off.
Bitcoin was trading around $18,812.36 as of 3:50 a.m. ET, down more than 5%, according to CoinDesk. Ether, which has largely outpaced bitcoin’s gains in recent months, was down more than 8% at $1,518.59.
Central banks around the world are fighting runaway inflation by tightening monetary policy. The US Federal Reserve undertook a series of interest rate hikes totaling 2.25 percentage points. Markets expect further interest rate hikes.
The Fed’s policy tightening strengthened the US dollar, which weighed on risk assets. The 10-year US Treasury yield also jumped.
Bitcoin has traded in correlation with stocks and so if they go down, in general, so will the cryptocurrency.
“The macroeconomic environment also continues to prove challenging with the dollar continuing to post highs. This is impacting all risky assets as we can see,” Vijay Ayyar, vice president of business development and international at crypto exchange Luno, told CNBC.
“If we see the dollar starting to come back down, then we should be able to bring risk assets such as bitcoin back up. »
The cryptocurrency market has taken a beating this year, with nearly $2 trillion wiped off its value since peaking in November. Bitcoin is around 60% off its all-time high of $68,990.90 hit in November.
The selloff was prompted by a tough environment for risky assets as well as cryptocurrency-specific issues, including project collapses and widespread bankruptcies in the industry.
Ethereum merger in sight
Bitcoin has been trading in a tight range between $18,000 and $24,000 since June. See also: Analyst advises STEPN (GMT) investors to get out: GMT price will crash in the next few days. Ayyar de Luno said that when forming a bottom, “bitcoin usually likes to go back and test previous lows to see if they hold support.”
He said that unless bitcoin breaks below $17,500, the market should consolidate in the $18,000-$24,000 range.
Meanwhile, ether and “altcoins,” or alternative currencies, have managed to outperform bitcoin. Ether has outperformed bitcoin since the two cryptocurrencies hit their lowest level in June.
Ether is the native cryptocurrency of the Ethereum network. Ethereum is planning a huge upgrade this month – known as a merger – which its proponents say will make the network more efficient.
“Ethereum hit yearly highs against the bitcoin pair ahead of the merger,” Ayyar said. So there has been a lot more interest and activity in the Altcoin space, as bitcoin consolidates. ”
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