Bitcoin Price Dips Below $29K on US Fed Rate Hike Concerns
Bitcoin and other cryptocurrencies fell back below $30,000, which is a closely watched level. This happened because persistently high inflation in the UK made people worry that interest rates would keep going up. On Thursday morning (Asian session), the biggest digital token fell as much as 4.5% before making up some of its losses and trading around $28,945. Bitcoin has traded on both sides of the number since it hit the benchmark for the first time since June last week.
Ether went down by 5.6%, but smaller tokens like Solana and Avalanche went down more. Also, stocks like Coinbase Global, Marathon Digital, and MicroStrategy that are linked to cryptocurrencies fell. Most of the drop happened after UK consumer price data came out on Wednesday, which showed that inflation stayed above 10% in March. This added to other recent signs that central banks will keep raising interest rates. This gives buyers to pause after Bitcoin’s price rose about 80% this year, which was mostly due to rumors of a rate cut coming soon.
According to statistics from Coinglass, the sudden selloff caused $175 million worth of long contracts on cryptocurrency markets to be closed. Vetle Lunde, the senior expert at K33 Research, said this was a “classic liquidation and structural market reaction.” The U.S. economic data from this month has also debunked the idea that a regional bank problem will force the Federal Reserve to stop easing. In March, a key measure of US inflation showed signs of slowing, but probably not enough to stop the Federal Reserve from changing direction. Also, pay growth in the U.S. is higher than inflation.
Fadi Aboualfa, who is in charge of research at Copper, a company that stores digital assets, says that recent worries about interest rates are unlikely to stop the crypto rise this year. Positive funding rates, in which long buyers pay a small fee to short players, were used as proof of a positive outlook. “After sitting on the sidelines, we’ve seen that many hedge funds are now continuously allocating to Bitcoin,” he said in an email. We don’t see any big changes happening. Above $30,250, it was hard for the Bitcoin price to gain strong traction. BTC started a new drop below $30,000 and $29,500, causing Ethereum to fall below $2,000.
The price went past the support zone of $29,000 to $28,500. The price went down to about $28,577, and it is still going down. At the moment, Bitcoin is worth less than $30,000 and less than the 100-hour Simple moving average. At the moment, it is trying the 23.6% Fibonacci retracement level of the latest drop from $30,461 to $28,558. On the hourly chart for BTC/USD, a key downward trend line is emerging with support near $29,050. So, the price is likely to meet pushback near $29,050.
Near $29,250, the first major support is starting to show up. The next important place of resistance is right around $29,500. The latest drop from $30,461 to $28,577 is close to the 50% Fibonacci retracement mark. If the price breaks above the $29,500 barrier, it could go up by a lot. In the given situation, the price could go back up to around $30,000. If the money keeps coming in, a $30,500 check could be done.
If Bitcoin’s price doesn’t go above $29,500, it may keep going down. Near-term support is given by the level of $28,700.
Around $28,500 is the next important support level. If the price breaks and stays below $28,500 for a while, it could fall to the $28,000 support level. If the losses keep coming, Bitcoin could fall to $27,400.