Bitcoin price is falling. Job Friday is key for cryptos.
Bitcoin
and other cryptocurrencies fell back on Thursday as the momentum behind a recent rally appeared to fade and range-bound trading took hold. But Friday has an important macroeconomic catalyst – and the reaction of cryptos should be watched closely.
The price of Bitcoin has fallen 2% in the past 24 hours, falling below and hovering around the key $28,000 level. The biggest digital asset is hovering around the highest levels since June last year, when the crypto crash accelerated, but pared gains and so looking to lose steam since a recent peak above $29,000.
“Bitcoin’s recent pullback has confirmed that the trading range of the past two weeks remains in place,” said Alex Kuptsikevich, an analyst at broker FxPro. “The first cryptocurrency sees no significant obstacles on the way down to levels near $27,000. The increasing decline may be influenced by negative sentiment in traditional financial markets.”
Digital assets, despite an increasingly murky and complex regulatory backdrop, remain highly sensitive to macro forces and correlated with equities, moving in tandem with
Dow Jones Industrial Average
and
S&P 500.
Bitcoin’s remarkable rally so far this year — with gains of around 70% — has come amid expectations that the Federal Reserve will shift monetary policy to a slower pace of rate hikes and possibly even rate cuts soon.
A dramatic rise in interest rates last year, a campaign by the Fed to counter decades of high inflation with tighter economic conditions, was a driving force behind the sell-off in stocks and crypto. But recent signs that inflation is slowing and interest rate hikes are having painful effects – including introducing heavy strains on banks – have seen traders temper expectations of an aggressive central bank.
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With Bitcoin trading trends so wrapped up in Fed policy, the release on Friday of the US jobs report for March – a key indicator for the Fed as it monitors inflationary pressures and the health of the economy – will be critical. And Bitcoin’s reaction is likely to be a leading indicator of how stocks will react, as the stock market is closed on Good Friday while digital assets will continue to trade 24/7.
Beyond Bitcoin,
Ether
— the second-largest crypto — shed 1.5% to fall below $1,900. Smaller cryptos or altcoins were weaker, with both
Cardano
and
Polygon
decreasing 3%. Memecoins fell further after a recent Elon Musk-driven peak, with
Dogecoin
however down 6%
Shiba Inu
fell only 3%.
Write to Jack Denton at [email protected]
