Bitcoin stumbled on Thursday, with a series of central bank moves to curb inflation weighing on investor appetite for riskier assets.
On Thursday, bitcoin (BTC) tumbled by 9.72% to market the ninth daily loss in ten sessions. Reversing a 2.03% from Wednesday, bitcoin ended the day at $20,373,
A bullish morning saw bitcoin strike a morning high of $22,961 before sliding to a day low of $20,209.
The sell-off saw bitcoin fall through the First Major Support Level at $20,853 and end the day with a heavy loss.
Fears of a global recession stemming from central bank rate hikes weighed on riskier assets.
The NASDAQ 100 slid by 4.08%, contributing to the bitcoin sell-off. While tracking the NASDAQ through the US morning session, bitcoin decoupled from the NASDAQ in the afternoon session to extend its losses on the day.
For investors hoping for a “one hike and done” outlook, the FOMC economic projections on Wednesday painted a grim picture.
The US annual rate of inflation hit 8.6% in May, its highest in 40 years. Key inflation drivers remain firmly in place, suggesting the need for an aggressive interest rate path trajectory to begin bringing the inflation rate back to target.
A return to the Fed’s 2% objective is unlikely to be swift, leaving the global economy exposed to monetary policy moves for longer.
On Thursday, the Swiss National Bank and the Bank of England delivered rate hikes, adding to the market angst. The global economy is in a precarious state and aggressive rate hikes could tip the economy into recession. Inaction would likely have a similar outcome.
This sentiment is likely to increase market volatility near term. The markets will be looking for inflation sensitivity to the latest round of rate hikes, which leaves the crypto market exposed.
At the time of writing, the NASDAQ 100 Mini was up 35.25 points.
At the time of writing, BTC was down 0.29% to $20,313.
A mixed start to the day saw bitcoin strike a morning high of $20,587 before falling to a low of $20,221.
Bitcoin left the Major Support and Resistance Levels untested early on.
A move through the $21,184 pivot would bring the First Major Resistance Level at $22,158 into play.
BTC would need plenty of support to return to $22,000.
An extended rally would test the Second Major Resistance Level at $23,934 and resistance at $25,000. The Third Major Resistance Level sits at $26,685.
Failure to move through the pivot would bring the First Major Support Level at $19,401 in play. In the event of another extended sell-off, bitcoin could test the Second Major Support Level at $18,432.
Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal. Bitcoin sits below the 50-day EMA, currently at $21,522. Today, the 50-day EMA slid back from the 100-day EMA. The 100-day EMA fell back from the 100-day EMA, bitcoin price negative.
A breakout from the 50-day EMA would give the bulls a run at $22,500.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.