Bitcoin has seen two weeks in a row of losses, and the cryptocurrency started the week with a sour disposition as investors continued to mull over the hawkish statements made by Fed chair Jeremy Powell.
The leading cryptocurrency by market size had lost 1.99% in the last day, trading at $19,720 at time of writing. Even Ethereum had a bleak start to the week, trading down at 2.82% to $1,455. For the week as a whole, Bitcoin is down around 6.40 percent, while Ethereum is down around 7.59 percent.
In the same time period, the value of XRP, ADA, DOGE, and SOL all fell by 3.75 percent, 3.62 percent, 3.16 percent, and 3.89 percent, respectively. The market capitalization of all cryptocurrencies has dropped below $1 trillion for the first time since Friday, falling 2.22% in 24 hours to $958 billion.
Although most of the fundamental barriers to a market rebound appeared to be priced in, Friday’s flash sale was a reminder of the Fed’s determination to pedal the cryptocurrency market.
According to earlier reports, the remarks made by Federal Reserve Chair Jeremy Powell at last week’s Jackson Hole Symposium will be a major driver of Bitcoin’s price movement in either way. The Fed chair’s statement that the US economy’s growth has slowed signaled that the central bank would likely maintain its robust anti-inflation policies.
It will take some time and aggressive use of our instruments to restore price stability by striking a better balance between demand and supply. Powell said on Friday that slower-than-average growth will be needed for an extended period if inflation is to be brought under control.
Investment and macroeconomics specialist Alfonso Peccatiello warns that the Federal Reserve Board should consider raising interest rates in light of the perilous inflationary pressures. “The Fed has never halted raising until real Fed Funds (nominal Fed Funds minus YoY PCE) turned positive,” Alf said, implying that the cryptocurrency market might remain subdued while investors flock to safer assets like bonds, gold, and high-quality stocks.
But with recent economic data showing that some areas of the economy are recovering, several experts remain confident that Bitcoin will soon return. The latest PCE Price Index number came in lower than expected, and it appears that inflation has peaked. This was due in part to a decline in energy prices.
Since the 18-month stochastic Oscillator closed over the oversold threshold in July 2022, the heavily Bitcoin-correlated Nasdaq-100 has officially flashed a bullish signal, as reported by Caleb Frazen, Senior market analyst at Cubic Analytics. Considering 1987, this is only the fifth such signal. “The bottom has already been reached in previous indications,” he wrote on Monday. In his opinion, this is statistically optimistic for Bitcoin and other risk assets.
Bitcoin’s price may soon face a retest of the 200-week moving average, which may trigger a rebound from 2017’s highs.