Bitcoin back down to around US$20,000 after Jackson Hole caution
BITCOIN appeared stuck around US$20,000 on Sunday (Aug 28) as part of a wider cryptocurrency market retreat, amid concern about the Federal Reserve’s rate hike path.
The largest token was little changed as at 7.45 am in New York. That came after a 2-day drop of 7.6 per cent, moving in tandem with US stocks last Friday after Fed chair Jerome Powell’s speech at the Jackson Hole conference. The wider crypto market retreated on Sunday, with the MVIS CryptoCompare Digital Assets 100 Index dropping 1 per cent in its fourth straight day of declines.
“Money is flowing out of risky assets. Crypto followed the sharp adjustment of the US stock market” after Powell’s remarks, said Cici Lu, chief executive officer at consulting firm Venn Link Partners. “Markets didn’t like what he had to say, and Bitcoin is resuming as a high-beta asset.”
The US$20,000 level acted as support for Bitcoin when it hit lows in recent months, but the cryptocurrency had worked its way higher in recent weeks. Before Saturday, it had not been below US$20,000 since Jul 14, and had even crossed above US$25,000 earlier in August.
The gyrations have come amid uncertainty about the path and magnitude of Fed rate hikes, and the effect they could have on riskier assets.
Numerous strategists have flagged US$20,000 as a key point for Bitcoin, though levels of support could lie lower as well.
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Fairlead Strategies’ Katie Stockton sees long-term support in the US$18,300 to US$19,500 area. Fundstrat strategist Mark Newton has flagged some key areas in the US$19,000 range, with a “real area of importance” around US$17,500, near the June lows and which would allow for a 100 per cent alternate wave projection of the most recent decline from mid-August, he said in a note last Friday.
The past 2 Fridays have been tough in the crypto market, with US$288 million of crypto longs liquidated on the most recent one, data from Coinglass showed. On Aug 19, US$562 million of longs were liquidated, the most since Jun 13.
Second-biggest crypto Ether was holding steady on Sunday around US$1,500 after dropping 13 per cent over the prior 2 days. It has been fluctuating in recent weeks ahead of its much-anticipated Merge upgrade, which is due in mid-September.
“Ethereum’s drop ahead of the impending Merge is also of note as bearish sentiment appears to be taking hold across all so-called risk assets,” analysts at Bitfinex said in a note on Friday. “The volatility that has become so characteristic of the digital token space shows no signs of abating.” BLOOMBERG
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