Bitcoin loses steam and tests $40,000 again after Powell´s remarks
By Noemi Jansana / Alejandra Zamora
Date: Friday 22 Apr 2022
(Sharecast News) - The cryptocurrency market is back to declines of around 2% on Friday, weighed down by remarks from US Federal Reserve Chairman, Jerome Powell, who did not shy away from making it clear that a 50 basis point rate hike at the central bank's May meeting is on the table. He also opened the door to further rate hikes of 0.5% at successive meetings. Bitcoin gives ground, moves away from its recent 10-day high above $42,000 and looks set to test the important $40,000 support.
The rally that was unleashed in recent sessions in cryptocurrencies after the digital asset fell to a five-week low of $38,500 has lost steam and the world's largest cryptocurrency seems unable to maintain its momentum. However, "the resilience shown to the move below $40,000 was impressive and potentially indicative that the space remains bullish, despite uncertainty in other financial markets," noted Craig Erlam, analyst at Oanda.
"The Nasdaq has had a more turbulent week, while the crypto space has managed to disengage, perhaps a sign that it is distancing itself from the link between the performance of the two," the analyst explained. "We'll see if it can maintain it, as there is one thing they both have in common: they are considered risk assets, although Bitcoin is at the higher end of the scale," he added.
It has been this link precisely, which some experts consider transient as it is not driven by the fundamentals of digital currencies, but by a sentiment of new-fangled investors who have entered cryptos in the last year, that has triggered some selling again after Powell showed off his hawkish feathers during a discussion organized by the IMF. Tightening monetary policy is negative for tech stocks on the Nasdaq and more novice investors in crypto currencies treat Bitcoin as just another tech stock, hence the lumpy sell-off.
As for the 'altcoins', the behavior has been similar, with Ethereum giving ground below two resistance levels that it has failed to consolidate at $3,080 and $3,150, as it heads towards the important support at $3,000. Should it lose this level, the $2,850 level would come back into play.
Cardano, Solana, Avalanche and Polkadot are also in negative territory, while the total market capitalization is at $1.88 trillion.
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