Investing.com – and the entire cryptocurrency market have been falling since last night, with down to $42,400, and posting a 24-hour drop of more than 6% to $43,400 at the time of writing.
The fall came shortly after the release of Fed Minutes which confirmed an increasingly hawkish orientation of the US central bank.
Hawkish Fed Minutes send Bitcoin tumbling
The Fed minutes notably mentioned the reduction in the Fed’s balance, namely the sale of bonds that it bought en masse as part of its asset purchase program that it has started to reduce. Fed members believe that the reduction in the Fed’s balance sheet could start a few months after the first rate hike.
“Almost all of the participants agreed that it would probably be appropriate to begin the balance sheet clearance at some point after the first increase in the federal funds rate target range,” the meeting summary said.
Current market expectations are that the Fed will begin to raise its benchmark interest rate in March, which would mean that balance sheet reduction could begin before the summer.
The minutes also state that once the process is underway, “the appropriate pace of balance sheet run-off would likely be faster than it was during the previous normalisation episode” in October 2017.
This hawkish statement has strengthened the dollar, pushed down equities and pushed up bond yields, all of which has hurt Bitcoin, which is often seen as a hedge against loose monetary policies, and therefore loses an advantage if central banks start tightening their monetary policies.
Technical Review BTC/USD
From a technical point of view, it should be noted that Bitcoin broke below the $44,000 support, and even briefly dropped below the 4/12 low, which was marked following the latest flash crash in BTC.
If the $42,000/$42,500 support level is broken, a drop to $40,000 is possible. On the upside, there are many concrete obstacles in the way of a possible rebound, including the 200-day moving average at $48,000 and the major psychological threshold of $50,000, with chart resistance at $52,000, which must be breached for Bitcoin to display a more bullish profile again.
Update on other major cryptocurrencies
Lastly, it should be noted that Bitcoin is not the only cryptocurrency to fall since yesterday. has fallen the most, currently just above $3,500, at -7.55% over 24 hours. However, (SOL) has the biggest drop in the top 10, falling almost 10% since yesterday.
It is also interesting to note that only 3 cryptocurrencies in the top 100 escape the adjustment. UNUS SED LEO (top 44) is up 1% over 24 hours, Safemoon (top 78) is up 18.7% and XDC Network 2.72%.
Note that this widespread fall in the cryptocurrency market has brought the total capitalisation closer to 2 trillion, at 2070 billion at the time of writing.