Why Bitcoin, Ethereum, Dogecoin Are Dipping Today?

Major cryptocurrencies experienced a decline on Tuesday evening, reflecting the growing acceptance of the notion of prolonged higher interest rates in financial markets.

What Happened: Thursday is set to bring more key inflation data, as investors eagerly watch for any signs of a U.S. recession and potential interest rate hikes.

The Securities and Exchange Commission has announced a decision to postpone the ruling on the proposed ARK 21Shares Bitcoin ETF until next year. The new deadline for this decision has been set for January 10.

“The Commission finds that it is appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule change,” it said Tuesday in a filing. 

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Currently, the global crypto market capitalization stands at $1.05 trillion, a 0.89% increase in the last day.

The S&P 500 experienced a decline of 1.47%, closing at 4,273.53, which is below the 4,300 mark for the first time since June 9. Similarly, the Nasdaq Composite retreated by 1.57% to reach 13,063.61.

Meanwhile, the U.S. Dollar index, a measure of the greenback’s strength against a basket of six other currencies, soared to a 10-month high on Wednesday to 106.21 — the highest since Nov. 30. This is amid a backdrop of surging 10-year treasuries, which have touched 16-year highs, as economic data remains upbeat despite elevated interest rates, reported Reuters.

JPMorgan Chase CEO, Jamie Dimon, has cautioned that the Federal Reserve raising the rates to 7% could spell disaster as it would result in increased financial stress. He quoted Warren Buffett’s famous saying about finding out who is swimming naked when the tide goes out. Dimon said, “That will be the tide going out.”

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Analyst Notes

Crypto analyst Michael Van de Poppe predicts that Bitcoin will experience some weakness and may not break crucial levels. "If that’s not going to break, I’m assuming we’ll test $25,700-26,000 for any long positions."

Benjamin Cowen noted that in the past 30 days, the supply of ETH has increased. Due to a decrease in demand as tourists exit the market, the amount of ETH being burned has also decreased. 

"I suspect ETH will return to being deflationary again, but it might take more accommodative monetary policy for that to happen."

Pseudonymous analyst Kaleo suggests that Bitcoin may potentially experience a significant surge, with the chart indicating a price target of $38,000.

Photo by CMP_NZ on Shutterstock

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