Bitcoin slide continues on 'mixed' Fed signals on rate hike

The largest cryptocurrency dropped by as much as 3 per cent to $22,716.59, the lowest level since August 10

Bitcoin fell for a fifth day in the past six trading sessions in a continued retreat towards a key technical level as investors considered mixed signals from US Federal Reserve officials around the potential pace of interest rate increases.

The largest cryptocurrency dropped by as much as 3 per cent to $22,716.59, the lowest level since August 10 and close to its 200-week moving average of about $23,000, which Genesis Trading pointed to as a measure historically in focus for the market.

Number two digital currency Ether dropped as much as 3.8 per cent. The likes of Polygon, Solana and Avalanche declined 7 per cent or more.

The rally that brought it back to $25,000 has lost considerable momentum and that could begin to weigh more heavily on the price (of Bitcoin), said Craig Erlam, a senior market analyst at Oanda.

A move below $22,500 may suggest the rally has run its course for now, he said.

Cryptocurrencies have been battered this year as the Fed raised rates amid elevated inflation readings, and risk assets more broadly, such as big technology stocks, have struggled.

Bitcoin and Ether are both down about 50 per cent since December 31. Still, they are off their worst levels in mid-June amid tentative optimism that inflation may be peaking, and as the Ethereum network prepares for its much-anticipated upgrade called the “Merge”.

In the short term, correlation risks are heightened as equities, especially technology names, are delicately poised at key resistance levels, said Jamie Coutts, senior market structure analyst at Bloomberg Intelligence.

In addition, cryptocurrency veterans may be cooling off in their buying.