Bitcoin is in a flirtatious state after the first consecutive drop since the beginning of the year, after the company Microsoft published a poor earnings outlook, which worsened investor sentiment in general.
The largest token fell by 2.5% and as of 9:26 am in Singapore on Wednesday traded at a price of about $22,380 after lowering in the US. A number of smaller coins, from Ether to Cardano and Avalanche, were also in the red. Digital assets are one of many investments that jumped in early 2023 on bets that central banks will slow down or even cancel interest rate hikes in the coming months.
However, an optimistic stance is vulnerable toreversals, for example, if the Federal Reserve at its meeting next week abandons dovish expectations in the ongoing fight against inflation. According to Tony Sycamore, a market analyst at IG Australia, the disappointment in Microsoft's forecasts has been reflected in cryptocurrencies, which are still quite strongly correlated with tech stocks.
“With risk assets this year, it was almostthe same as trying to keep the ball underwater,” he said. “The market is now thinking about how much further to push them.” The short-covering surge that likely contributed to Bitcoin's 36% surge this month may also be fading, according to Hayden Hughes, chief executive of social trading platform Alpha Impact. “Prices started to reverse as hedge funds re-entered short positions after the weekend,” he said.
Kathy Stockton, founder of Fairlead Strategies LLC,The technical analysis firm sees significant resistance for bitcoin around $25,000. The token was last at this level in August. In a note this week, Stockton said she was “neutral in the interim due to the return of overbought conditions” for bitcoin.
Last year, bitcoin and the 100 largest tokensfell in price by more than 60% due to rising borrowing costs and a series of cryptocurrency explosions. According to CoinGecko, the total market value of digital tokens rose by about $250 billion in January. © 2023 Bloomberg