Major cryptocurrencies are trading in the red on Wednesday evening as traders become wary of UK inflation and the looming deadlock over the U.S. debt ceiling.
| Cryptocurrency | Gains +/- | Price (Recorded 9:30 p.m. EST) |
| Bitcoin (CRYPTO: BTC) | -4.00% | $26,087 |
| Ethereum (CRYPTO: ETH) | -3.95% | $1,776 |
| Dogecoin (CRYPTO: DOGE) | -4.18% | $0.069 |
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What Happened: The crypto market has been struggling with low trading volume and volatility amid ongoing regulatory uncertainties and macroeconomic concerns. While the release of the latest Federal Open Market Committee (FOMC) minutes showed central bankers divided on interest rate hikes, it did little to boost market confidence.
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At the time of writing, the global crypto market capitalization stood at $1.10 trillion, a decrease of 3.42% over the last day.
The US stock market fell on Wednesday as lawmakers worked to negotiate a deal on the country’s debt ceiling. The uncertain outcome increased concerns of a potential default. The S&P 500 experienced a drop of 0.73%, and the Nasdaq Composite fell by 0.61%.
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Analyst Notes: "Bitcoin is under pressure as the risk of a US default grows and the Fed could be in a position to deliver more tightening. Bitcoin is going to be very sensitive to surging Treasury yields as too many crypto/blockchain companies will struggle with financing. It is hard enough to find a bank that will deal in cryptos, let alone take out loans for long-term projects. Bitcoin remains range bound and should continue to consolidate near the lower boundaries of its downward sloping trading range, with the $25,000 level providing massive support," said Edward Moya, Senior Market Analyst at OANDA.
On Thursday, the yield on US Treasury bills with an early June maturity continued to increase, reaching over 7%, following Fitch’s move to put the U.S. on credit watch for a potential downgrade. The ratings agency announced that it had placed the country’s “AAA” rating on negative watch.
Pseudonymous crypto analyst Negentropic, who happens to be one of Glassnode’s co-founders, suggests that a Bitcoin breakout is highly likely based on the readings of two simple moving averages (SMAs). The 200-day SMA, a critical metric used by traders to determine long-term market trends, has remained a strong support line for BTC. The analyst expects the 50-day SMA to soon cross over the 200-day SMA, which has historically led to substantial gains for Bitcoin.
"Bitcoin bottom is in. Shorts getting exhausted after failing numerous attempts to break below 200-day SMA, which is a solid support. 50-day SMA bullish crossover over 200-day SMA, it's a matter of when BTC goes off," he tweeted.
#Bitcoin bottom is in
Shorts getting exhausted after failing numerous attempts to break below 200SMA, which is a solid support.
50SMA bullish crossover over 200SMA, it's a matter of when #BTC goes off https://t.co/pfyjsmCGyE pic.twitter.com/ZmKVQiQwYz