Bitcoin faces further falls ahead of Fed meeting
Bitcoin is trading flat ahead of US Federal Reserve Chairman Jerome Powell’s Senate Banking Committee meeting on Tuesday.
The world’s largest digital asset (BTC-USD) is down 0.2% at $22,412, while ether (ETH-USD) is steady at $1,565.
The global cryptocurrency market cap on Tuesday was $1.07tn, up 0.3% over the past 24 hours, according to CoinGecko data.
However, according to data from Cryptoquant, the overall crypto market is showing bearish signals, betting on further decline.
Read more: Crypto live prices
According to chain analysis by Cryptoquant: “The market is broadly bearish and betting on further decline, according to funding rates.
“The funding rate of perpetual futures normally signals the current market bias, at which point traders build short positions.
“The last negative hourly value was in December 2022, with the price of Bitcoin around 16 thousand US dollars.”
Fed’s Jerome Powell heads to Capitol Hill
Crypto traders are braced for caution ahead of Jerome Powell’s appearance before the US Congress this week as part of the Fed’s semi-annual testimony on monetary policy.
American lawmakers and investors are concerned that more hawkish interest rate hikes by the Federal Reserve will dry up economic activity in the United States, while having only a limited effect on bringing down inflation.
The Fed has raised its benchmark interest rate eight times over the past year, most recently a quarter-percentage-point increase early last month that took the overnight lending rate to a target range of 4.5% to 4.75%.
Higher interest rates encourage investors to save in fiat currencies like the dollar, and a retreat from high-risk assets like bitcoin.
Cryptocurrency traders are hoping for a signal of a less hawkish Federal Reserve at Tuesday’s meeting of the Senate Banking Committee.
Read more: Bitcoin Down 5% Ahead Of Mt Gox Payouts
The cryptocurrency market faces several headwinds
The market is already facing strong headwinds from the recent problems at Silvergate Bank, and the upcoming Shanghai upgrade of the Ethereum (ETH-USD) network.
Shares in crypto-friendly bank Silvergate ( SI ) are down 95% in the past year, and it faces US regulatory probes over the collapse of major clients such as FTX and related hedge fund Alameda Research.
Ethereum’s Shanghai upgrade will allow those who have “staked” their ether to withdraw it, giving them the opportunity to sell on the market again, “staking” is the process of locking ether on the blockchain for a certain period of time to validate the network.
Also, the upcoming creditor payments from the bankrupt MT Gox exchange could affect the cryptocurrency market.
The civil rehabilitation trial surrounding the Tokyo-based bitcoin exchange has ended, and payments to creditors are scheduled to begin on Friday, May 10. March.
However, there are fears that the 142,000 bitcoins to be released to creditors could be dumped on the market as soon as they become available.
Read more: How a bitcoin lawsuit in Japan could create crypto millionaires
The size of a possible $3 billion bitcoin payout has led cryptoanalysts to warn of a possible market shock where recipients dump their newly acquired bitcoin en masse after reclaiming ownership of their coins.
See: Ukraine buys military equipment with crypto | Crypto Mile
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