Bitcoin prices are falling back from six-month highs notched in earlier trading.
Dan Kitwood/Getty Images
Bitcoin
and cryptocurrencies were declining Friday, falling back into lockstep with the stock market as wider investor sentiment soured amid fears the Federal Reserve will continue delivering pain to risk-sensitive assets with higher interest rates.
The price of Bitcoin has declined 3.5% over the past 24 hours to $23,725, crumbling from six-month highs above $25,000 notched in earlier trading. The largest digital asset has rallied more than 40% this year as investors poured back into high-risk bets like Bitcoin, but remains around a third of its record high in November 2021. While the pop to $25,000 spurred optimism, it remains a long march back to $30,000—the level from last June, before a wave of crypto company bankruptcies rocked the sector.
“Bitcoin’s failure to break above its August high was a disappointment and an immediate retest is not likely, but given Wednesday’s sudden surge in its price, there could be a lot of market participants who would want to buy the dip,” said Yuya Hasegawa, an analyst at crypto exchange Bitbank. “The price will likely be able to defend the $23,000 psychological level in the short term.”
Cryptos had torn higher over the past few days in the face of declines in the stock market, where the
Dow Jones Industrial Average
and
S&P 500
have been under pressure. But the correlation between the two risk-sensitive asset classes—strengthened over the past year amid a tough macro backdrop of high inflation and rising interest rates—is too strong to break just yet.
Mixed messages in economic data over the state of inflation have raised fears among investors this week that the Fed will continue to aggressively raise rates. That flies in the face of the narrative that inflation is falling and monetary policy will be easier, which has driven recent gains in risk assets. The central bank’s dramatic tightening of financial conditions last year, a bid to tame decades-high inflation, was the driving force in 2022’s market selloff, and higher rates would likely equal more pain for Bitcoin.
Beyond Bitcoin,
Ether
—the second-largest crypto—lost 1.5% to $1,650. Smaller cryptos or altcoins were more mixed, with
Cardano
crumbling 3% but
Polygon
popping 4%. Memecoins were muted, with
Dogecoin
down 3% and
Shiba Inu
shedding 4%.
Write to Jack Denton at jack.denton@barrons.com
Credit: marketwatch.com