Bitcoin eyes first two-day drop of 2023 as Microsoft dents mood
BITCOIN is flirting with its first back-to-back daily drop since the start of the year, following a poor revenue outlook from technology bellwether Microsoft that dented wider investor sentiment.
The token fell as much as 2.5 per cent, and was trading at about US$22,380 as at 9.26 am Singapore time on Wednesday (Jan 25). This came after it edged lower in US hours. A range of smaller coins, including Ether, Cardano and Avalanche, were also in the red.
Digital assets were among the many investments that jumped at the start of 2023, on bets that central banks would slow or even reverse interest-rate hikes in the months ahead.
But the sanguine stance is vulnerable to reversals. For instance, it could flip if the Federal Reserve at its policy meeting next week pushes back against dovish expectations in the ongoing fight against inflation.
The disappointment over Microsoft’s forecasts spilt over into crypto, which is still fairly strongly correlated with technology stocks, said Tony Sycamore, a market analyst at IG Australia.
“With risk assets, it’s almost been like trying to hold a ball underwater so far this year,” he said. “The market is now having second thoughts about how much further to push them.”
Hayden Hughes, chief executive at social trading platform Alpha Impact, said a burst of short covering that likely helped to propel the 36 per cent jump in Bitcoin this month may also be petering out.
“Prices began to reverse themselves, as hedge funds re-entered short positions after taking the weekend off,” he said.
Katie Stockton, founder of Fairlead Strategies, a research firm focused on technical analysis, said she saw significant resistance for Bitcoin at around US$25,000. The token last touched that level in August 2022.
Stockton said this week that she was “neutral intermediate-term with the return of overbought conditions” for Bitcoin.
Bitcoin and a gauge of the top 100 tokens both shed more than 60 per cent last year, as they were hurt by rising borrowing costs and a series of crypto blow ups. CoinGecko data showed that the overall market value of digital tokens rebounded by about US$250 billion in January. BLOOMBERG
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