Dogecoin Rises On Musk Effect, Bitcoin, Ethereum Slide: Analyst Says Inflation Risks 'Need To Go Away' Amid Regulatory Fears

Major coins traded in the red on Monday, as the global market cap went down 3.68% reaching $1.04 trillion, as of 8:30 p.m. EST.

What Happened: The largest cryptocurrency by market value, Bitcoin BTC/USD, traded below $23,000. Ethereum ETH/USD  was changing hands at $1,566, down 4.46% in the last 24 hours.

Dogecoin DOGE/USD was up 1.50% in the last 24 hours, pushing its price up to $0.091. This surge came following a Financial Times report that Elon Musk wants Twitter's payment system to start accepting cryptocurrency.

U.S. equities closed lower on Monday as traders await the Federal Reserve's decision on interest rates and studied fourth-quarter earnings reports from big techs such as Apple APPL and Meta Inc META. The tech-heavy Nasdaq Composite fell 1.9%, while the S&P 500 and the Dow Jones Industrial Average (DJIA) dropped 1.3% and 0.7%, respectively. 

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Analyst Notes: “Inflation risks are quickly cooling what was a rather impressive month for crypto. Bitcoin is declining as Wall Street becomes very defensive ahead of this week’s major risk events. The Fed is poised to downshift its tightening pace again, but they could argue that they will keep rates higher for longer and not cave at the first chance to cut rates. For crypto to have any underlying support given all the regulatory and contagion fears, inflation risks need to go away. Bitcoin has massive resistance at the $24,000 level, so if risk aversion remains in place, downward momentum might not find major support until the $21,000 region,” said Edward Moya, senior analyst at OANDA, in a note seen by Benzinga.

Crypto analyst Rekt Capital warned that there is a risk of Bitcoin developing a Lower High and so far, a small rejection has occurred to form one. However, if the apex crypto is able to Monthly close above $23,400, then this Lower High will likely not act as a strong point of rejection. 

Mark Yusko, founder and CIO of Morgan Creek, believes Bitcoin could be starting a new bull market as the 2024 halving approaches. He believes that the halving cycle could be a key factor in shifting the trend in BTC’s favor.

“We had the dip from $18,000 down to $15,000 and then back to $18,000. We made the perfect cup and handle pattern, but spring – interestingly enough, think about the four-year cycle, spring is basically flat… The key there is spring is flat, but there’s a lot of volatility. Summer, which I think starts in April-May, usually nine months ahead of the halving, that’s when things are going to get fun.”

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