Bitcoin, Ethereum, Dogecoin Slip: Fed's Powell Stirs Recession Fears, But Is Crypto Selloff Showing 'Exhaustion?'

Zinger Key Points
  • Bitcoin, Ethereum, Dogecoin slip on a day Fede Chair Jerome Powell testified before Congress
  • Inflationary pressures remain firm around the world
  • Selling by North America's first BTC ETF could be capitulation needed - OANDA's Edward Moya

Bitcoin, Ethereum and major coins traded lower on Wednesday evening as the global cryptocurrency market cap slipped 2.1% to $887.6 billion at press time.

Price Performance Of Major Coins
Coin 24-hour 7-day Price
Bitcoin BTC/USD -2.1% -11.1% $20,116.83
Ethereum ETH/USD -4.7% -14.7% $1,061.83
Dogecoin DOGE/USD -2.8% 1.3% $0.06
Top 24-Hour Gainers (Data via CoinMarketCap)
Cryptocurrency 24-Hour % Change (+/-) Price
Polygon (MATIC) +14.9% $0.47
Uniswap (UNI) +9.6% $5.11
Amp (AMP) +6.2% ​​$0.0095

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Why It Matters: U.S. Federal Reserve Chair Jerome Powell appeared before Congress on Wednesday and acknowledged the hardship inflation is causing.

“We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so,” said Powell. 

Risk assets moved lower as markets grappled with recession fears. At press time, Bitcoin and Ethereum were seen teetering near psychologically important marks of $20,000 and $1,000 respectively. S&P 500 and Nasdaq futures declined 0.3% and 0.4%, respectively. 

“The stock market rally faded as Powell acknowledged that they need to do their job and get inflation back down and that it is a possibility that they could send the economy into a recession,” said Edward Moya, a senior market analyst with OANDA. 
”Bitcoin remains a shadow to U.S. stocks and pared losses after Fed Chair Powell pledged to be nimble, prompting traders to believe they might not be too aggressive with tightening once they believe the economy has significantly weakened,” said Moya in a note, seen by Benzinga.

Even so, selling is showing signs of “exhaustion,” according to Moya. The analyst pointed to the $500 million record one-day outflows seen in Purpose Bitcoin ETF — North America’s first Bitcoin ETF — and said it could be the “capitulation that is needed to form a short-term base for Bitcoin.”

Global inflationary pressures continue to mount. Canada’s inflation rose at the fastest clip since 1983 with the annual inflation rate touching 7.7%, reported Reuters. In the U.K., CPI growth touched 9.1% year-over-year.

Bitcoin could be headed to the $17,600 mark or even lower at $16,000 should it fail to hold on to the $19,800 mark, according to a tweet from cryptocurrency trader Justin Bennett. 

Glassnode tweeted that the Bitcoin Mayer Multiple — the multiple of the current Bitcoin price over the 200-day moving average — is currently trading at 0.5. The on-chain analytics firm said Bitcoin prices have only closed at a Mayer Multiple of 0.5 or lower on 3% of all trading days.

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