Bitcoin Drops to 6-Month Low, Ether Eyes Bearish Cross as US Stock Index Futures Erase Early Gains
Bitcoin, ether and the broader crypto market faced another wave of selling during Monday's European trading hours as U.S. stock index futures erased early gains, signaling an extension of last week's risk declines.
- Bitcoin fell to $33,600, its lowest level since July 24, even as technical indicators signaled oversold conditions.
- The leading cryptocurrency has declined 27% this month and is struggling to find a price floor with whales or large investors staying on the sidelines.
- Ether, the second-largest cryptocurrency, slid 10% to $2,270, the lowest since July 28, according to CoinDesk data. The native token of Ethereum's blockchain has lost 38% this month.
- Ether could soon see a bitcoin-like death cross, a bearish cross of the 50- and 200-day moving averages. Bitcoin has dropped over $10,000 since confirmation of the negative crossover earlier this month.
- Other prominent coins like Solana' SOL, Cardano's ADA and Polkadot's DOT fell 12% to 15%.
- The latest sell-off comes after Goldman Sachs predicted a faster pace of Fed tightening if inflation continues to rise. The heightened geopolitical tensions between U.S. and Russia could be adding to bearish pressures around risk assets, in general.
- “We see a risk that the [Federal Open Market Committee] will want to take some tightening action at every meeting until the inflation picture changes,” Goldman economist David Mericle said in a note to clients on Saturday, according to CNBC.
- The investment bank has penciled in four quarter-percentage-point rate hikes for this year. Fed fund futures are priced for nearly five rate increases.
- Most commentators have tipped the first increase in borrowing rates in March followed by three more at subsequent quarterly meetings.
- The ultra-hawkish expectations perhaps leave the door open for a relief rally if the central bank disappoints market expectations later this week by sticking to its December projection of three rate hikes in 2022.
- The Fed’s January policy meeting is due to start on Tuesday and the statement and interest rate projections will be published on Wednesday at 19:00 UTC.
UPDATE (Jan. 24, 11:39 UTC): Adds bitcoin large investors in second bullet point, monthly drops; adds Fed background starting in eighth bullet.
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Omkar Godbole is the senior reporter on CoinDesk's Markets team.
