Crypto market relief stemming FED Chair Powell testimony on Tuesday was short-lived. A 2-day winning streak came to an end on Thursday, with a 2.51% slide in the NASDAQ weighing on the crypto majors.
Hawkish chatter from FOMC members weighed on riskier assets on Thursday. A number of FOMC members talked of the need for a March rate hike. Amongst them, some talked of the need for more than 3 hikes this year to curb inflation. The comments were in contrast to FED Chair Powell’s testimony that had supported riskier assets mid-week.
Bitcoin (BTC) fell by 3.06% to end the day at $42,576. Elsewhere, Chainlink (LINK) tumbled by 7.05% with Cardano’s ADA sliding by 6.09%. Things were not much better for Ethereum (ETH) and Litecoin (LTC), which ended the day down by 3.89% and by 3.66% respectively.
The Thursday sell-off saw the crypto market cap fall from a day high $2,119bn to a low $1,992bn before a partial recovery.
In spite of the pullback, the Bitcoin Fear & Greed Index remained unchanged at 21/100 and in the red. A level in the red and close to or at zero indicates investor fear of further price declines.
Interconnectedness with U.S Markets to Raise More Regulatory Concerns
Earlier this week, the IMF had raised concerns over the interconnectedness of cryptos and the global financial markets. Thursday’s moves across the U.S equity markets and the crypto market provided further evidence of interconnectedness. The IMF’s comments had followed on from concerns raised by the Bank of England over cryptos and UK financial stability.
Movements across the global financial markets and the crypto market will likely give regulators more reason to move quickly towards a global regulatory framework for the crypto market.
For the Day Ahead
With movements across the crypto market now hinged on market sentiment towards FED monetary policy, we can expect more influence from U.S economic data and FOMC member chatter near-term.
Later today, U.S retail sales figures will give a sense of what impact inflation is having on consumer spending. Any FOMC member chatter will also need considering
For Bitcoin, a break back through to $44,000 levels would be needed to bring $45,000 levels and January’s high $47,979 into play. With market jitters over FED monetary policy in play, however, we can expect plenty of resistance at Thursday’s high $44,443.
A fall back to sub-$41,500 levels would bring sub-$40,000 and Monday’s low $39,668 into play.
At the time of writing, Bitcoin was down by 0.25% to $42,470.