Bitcoin was stuck around $20,000 on Sunday amid concerns over the pace of rate hikes by the Federal Reserve, part of a broader pullback in cryptocurrency market.
It was a two-day drop for U.S. stocks after falling 7.6% on Friday after Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole conference. The broader cryptocurrency market retreated on Sunday, with the MVIS CryptoCompare Digital Assets 100 Index down 1% for the fourth day in a row.
Cryptocurrencies followed a sharp correction in the US stock market,” Chichi Lu, CEO of consultancy Venn Link Partners, said after Powell’s comments. “The markets didn’t like what he said, Bitcoin is once again a high-beta asset. ”
The $20,000 level served as support for bitcoin as it hit lows over the past few months, but the cryptocurrency had been rising over the past few weeks. Before Saturday, it hadn’t fallen below $20,000 since July 14 and even topped $25,000 in early August
Volatility arises from uncertainty about the timing and extent of Fed rate hikes and their potential impact on riskier assets.
Numerous strategists have marked $20,000 as a key point for Bitcoin, although support levels may also be lower. Fairlead Strategies’ Katie Stockton sees long-term support in the $18,300 to $19,500 area.
Fundstrat strategist Mark Newton pointed to some key areas in the $19,000 range, with an “area of real importance” around $17,500 close to June lows, a 100% wave projection, an alternative to the recent decline from mid-August would allow, he said in a note on Friday.
The past two Fridays have been tough in the crypto market, with $288 million worth of long crypto liquidating on the last, according to data from Coinglass. On August 19, $562 million in long positions were liquidated, the most since June 13.
The second largest cryptocurrency Ether remained stable at around $1,500 on Sunday after falling 13% in the previous two days. It has fluctuated in recent weeks ahead of the highly anticipated Merge update, scheduled for mid-September.
Ethereum’s tumble ahead of the impending merger is also notable as bearish sentiment seems to be prevailing across all so-called risky assets,” Bitfinex analysts said in a statement on Friday.
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