Cryptocurrencies have been facing heightened volatility and unpredictable market swings this week, leading to a decline in price.[0] Bitcoin (BTC-USD) is currently trading at $23,082, down 1.45% over the last seven trading sessions.[1] Meanwhile, Ethereum (ETH-USD) has seen its value decline by 2.35% to $23,849 in the 24 hours to 4:30 p.m. in Hong Kong.
The recent decline in cryptocurrency prices follows the release of the U.S. Consumer Price Index (CPI) data, which revealed higher-than-expected inflation. This has led to concerns that the Federal Reserve will need to raise interest rates faster than previously signaled, prompting investors to take a more risk-averse approach.[2] Additionally, heightened U.S. regulatory enforcement activity focused on centralized exchanges is also causing Bitcoin and other tokens to retreat.
Goldman Sachs analysts are of the opinion that the Federal Reserve will implement more than 0.75% in rate hikes in the foreseeable future.[3] The Federal Reserve plans to increase interest rates by 0.25% three more times before March, after which they will pause and evaluate the circumstances.[3]
On-chain transaction volume for Bitcoin has also dropped from a high of 42 billion BTC to 29 billion.[4] This sudden decline further confirms the bearish divergence noted from a technical standpoint on the three-day timeframe.[4]
It is not unexpected, then, that the total market capitalization of all cryptocurrencies has fallen to $1.060 trillion following a one-day loss of $40 billion.[5] Bitcoin’s share of the market dominance rate is 42.1%.[6]
Crypto traders are awaiting the release of January’s personal-consumption expenditures (PCE) price index, which is the Federal Reserve’s preferred measure of inflation.[7] This data may provide more clarity on the headroom available to the Fed to raise rates higher and longer.[8]
Furthermore, the pseudonymous contributor pointed out that the 30-day moving average of active addresses increased during both the reversal of the bull market in 2019 and during the recovery from the impact of COVID-19 in 2020.[9] No pattern has been detected in 2023 thus far.[9]
The overall cryptocurrency market capitalization decreased by 1.95% to US$1.09 trillion in the 24 hours to 4:30 p.m.[10]
0. “Bitcoin Falls as Nasdaq 100 Scores Wild Swings amid Fed Jitters, US PCE Data Ahead” DailyFX, 23 Feb. 2023, https://www.dailyfx.com/news/bitcoin-btc-usd-falls-as-nasdaq-100-scores-wild-swings-amid-fed-jitters-us-pce-data-ahead-20230223.html
1. “Trader Says Bitcoin (BTC) Set To Rally in the Medium Term – But There’s a Catch” The Daily Hodl, 25 Feb. 2023, https://dailyhodl.com/2023/02/25/trader-says-bitcoin-btc-set-to-rally-in-the-medium-term-but-theres-a-catch/
2. “This Week in Crypto: Interest Rate Hike Likelihood Saps Strength from Tokens” TipRanks, 23 Feb. 2023, https://www.tipranks.com/news/article/this-week-in-crypto-interest-rate-hike-likelihood-saps-strength-from-tokens
3. “BTC/USD Forex Signal: Bitcoin Waits for the FOMC Minutes” DailyForex.com, 22 Feb. 2023, https://www.dailyforex.com/forex-technical-analysis/2023/02/btcusd-forex-signal/191805
4. “Bitcoin Weekly Forecast: Reversal signs push BTC holders to tread cautiously” FXStreet, 24 Feb. 2023, https://www.fxstreet.com/cryptocurrencies/news/bitcoin-weekly-forecast-reversal-signs-push-btc-holders-to-tread-cautiously-202302240352
5. “Bitcoin on track for 6% weekly loss as investors avoid risky bets after hot inflation data” Seeking Alpha, 25 Feb. 2023, https://seekingalpha.com/news/3940914-bitcoin-on-track-for-6-weekly-loss-as-investors-avoid-risky-bets-after-hot-inflation-data
6. “Bitcoin slides to support at $23k as rising inflation sparks a run for the exits” Kitco NEWS, 24 Feb. 2023, https://www.kitco.com/news/2023-02-24/Bitcoin-slides-to-support-at-23k-as-rising-inflation-sparks-a-run-for-the-exits.html
7. “Bitcoin Slips Below $24,000 as Crypto Traders Eye PCE Inflation Data” Barron’s, 24 Feb. 2023, https://www.barrons.com/articles/bitcoin-ethereum-price-crypto-markets-today-dca33115
8. “Cryptos Firm Amidst FOMC Minutes, Economic Data” RTTNews, 23 Feb. 2023, https://www.rttnews.com/3346194/cryptos-firm-amidst-fomc-minutes-economic-data.aspx
9. “Bitcoin Reclaims $24K on FOMC Minutes Release, Stacks (STX) and Tezos (XTZ) Up Double Digits” Securities.io, 23 Feb. 2023, https://www.securities.io/bitcoin-reclaims-24k-on-fomc-minutes-release-stacks-stx-and-tezos-xtz-up-double-digits/
10. “Crypto Prices Today: Cardano (ADA), Polygon (MATIC), XRP (XRP), Solana (SOL)” CoinGape, 25 Feb. 2023, https://coingape.com/crypto-prices-today-cardano-ada-polygon-matic-xrp-xrp-solana-sol/