After briefly surpassing the $45,000 mark, Bitcoin, the world’s leading cryptocurrency by market value, fell below $44,000 later in the session. Ethereum and other major digital assets also saw notable declines.
Market Overview
Bitcoin (BTC) faced difficulty maintaining levels above $44,000 on Thursday, as U.S. equity markets extended losses in the wake of hawkish comments from a Federal Reserve policymaker.
St. Louis Federal Reserve President James Bullard advocated for a full percentage point rate increase by July, responding to an unexpectedly high inflation reading, Bloomberg reported. His statement followed data from the U.S. Department of Labor, which revealed that January’s Consumer Price Index (CPI) surged 7.5%, surpassing forecasts.
The crypto market mirrored the downturn in stocks, with Bitcoin slipping further after an initial dip. At the time of reporting, Bitcoin was trading at $43,807, reflecting a 1.4% decline over the past 24 hours, according to CoinDesk figures.
Ethereum, the second most valuable crypto by market cap, had dropped over 4% to around $3,105 in the same timeframe.
“Assets like gold and Bitcoin often briefly decline when inflation prints run hot because markets rapidly anticipate quicker Fed rate hikes,” tweeted Lyn Alden Schwartzer, founder of Lyn Alden Investment Strategy.
Bitcoin’s spot trading volume on centralized platforms rose compared to the previous day, and was also higher than last week’s average, CoinDesk data showed.
Over the last 24 hours, Bitcoin fluctuated within a range of $43,249 to $45,843.
Buyers reacted swiftly to a nearly 5% intraday drop during New York trading hours, helping to hold short-term support above $43,000.
The next key resistance level is $46,710, a point that represents a 38% Fibonacci retracement of the previous two-month decline. Some investors may begin to lock in profits as BTC approaches this resistance during the Asian session.
Currently, momentum indicators are showing signs of recovery on shorter timeframes, although price action remains turbulent following the U.S. inflation update. A stronger ceiling may be found near the $50,000 mark if buying pressure continues.
Potential retracements could find a floor between $40,000 and $43,000.
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10 a.m. HKT/SGT (2 a.m. UTC): Reserve Bank of New Zealand inflation expectations (Q4 QoQ)
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CoinDesk TV Recap
If you missed it, the latest episode of First Mover on CoinDesk TV covered the following:
U.S. Inflation Climbs to 40-Year High, FLOW Token Jumps on Olympics License News
Guests included Matthieu Jobbé-Duval of Dapper Labs, who shared insights on the FLOW token’s rally, and Scott Melker, known as “The Wolf of All Streets,” who analyzed the crypto markets post-CPI release. Brandon Buchanan, founder of Meta4 Capital, also discussed Web3 developments.
Top Headlines
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FLOW Token Spikes: FLOW surged due to a licensed Olympics mobile game linked to the ongoing Beijing 2022 Winter Games.
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Inflation Soars: U.S. CPI at 7.5% in January fuels Bitcoin’s inflation hedge narrative and Fed rate speculation.
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Crypto M&A Booms: PwC reports a nearly 5,000% year-over-year increase in crypto mergers and acquisitions in 2021.
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Ransomware Trends: Chainalysis finds ransomware groups targeting larger victims and demanding bigger payouts.
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El Salvador Downgrade: Fitch lowers El Salvador’s credit rating to ‘CCC’ amid concerns over its Bitcoin adoption and debt servicing.
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Avanti’s Progress: Wyoming-based crypto bank Avanti obtains an ABA routing number, a step toward Federal Reserve access.
In-Depth Reads
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Bitfinex Breach: Key questions remain unanswered in the $4.6 billion crypto hack case despite recent arrests.
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Crypto Education: Learn about “bull” and “bear” flags in technical trading in today’s crypto explainer.
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Crypto Seizures: DOJ’s seizure of $3.6B in Bitcoin highlights challenges in laundering digital assets.
Quotes of the Day
“Crypto, in many ways, is rewriting the rules, challenging centralized power structures by offering peer-to-peer alternatives. But it’s also compromised, adapting incrementally for profit,” wrote CoinDesk columnist Daniel Kuhn.
“Gaming’s future in crypto may lie in revisiting and reimagining traditional design principles,” opined Zach Hungate.
“Having a routing number doesn’t guarantee Fed approval for Avanti, but it’s a crucial initial milestone,” said Julie Hill, law professor at the University of Alabama.
“Many expected panic buying to subside post-pandemic, but consumer stockpiling of essentials persists,” reported The Wall Street Journal.