Cryptocurrencies say goodbye to their hot streak; Bitcoin loses $17,000
By Álvaro Estevez / Alejandra Zamora
Date: Friday 02 Dec 2022
(Sharecast News) - Cryptocurrencies are back in negative territory. After several days of rallies, digital assets have turned lower on Friday, with investors taking a more cautious approach and the market wondering if it has been overly optimistic in recent days. Bitcoin (BTC) falls 0.68% and drops below $17,000, while Ethereum (ETH) retreats 0.26% and remains near $1,300.
Jerome Powell, chairman of the Federal Reserve (Fed), commented about a possible moderation of interest rate hikes, opening the door to a hike of 50 basis points at the December 14 conclave after four consecutive meetings with hikes of 0.75%. However, Powell re-emphasized that what is important is still not the size of the rate hikes, but "how much further we will need to raise rates and how long it will be necessary to keep monetary policy in tight territory" to bring inflation back to the 2% target.
Initially, the 'cryptos' greeted these statements by the central banker with hikes, although the joy was short-lived. In the last day and a half, digital assets have turned lower and have found that the prospect of increased liquidity does not matter to them as much as the consequences of FTX´s bankruptcy. The collapse of what was once the world's second largest cryptocurrency exchange has already claimed its first victim and it may not be the last.
"Cryptocurrencies are struggling," noted Edward Moya, senior market analyst at Oanda. The market's biggest concern, the expert pointed out, is in Tether loans: "The 'stablecoins' are an important part of the cryptocurrency world and if one of the major ones breaks, that will send BTC and ETH to new lows."
Meanwhile, Rostin Behman, chairman of the Commodity Futures Trading Commission, appeared in the US Senate on the first day of the upper chamber's investigation into FTX´s bankruptcy. It will not be the last appearance to take place in the coming weeks; for example, on December 16 there will be a session in the Delaware Bankruptcy Court, where FTX filed for bankruptcy.
Be that as it may, what is certain is that a complicated panorama is presented for cryptocurrencies in the coming weeks. Some investors, such as Mark Mobius, are predicting drops to $10,000 for the queen of cryptocurrencies. Others, such as Pranav Kanade, portfolio manager at VanEck, acknowledge that it is difficult to predict when 'cryptos will bottom, but have been more optimistic. "My view is that everyone who remains in the ecosystem is probably a true believer in the underlying technology and even the bullish future of the asset class," he stated in an interview to 'CoinDesk'.
Meanwhile, Naeem Aslam, chief market analyst at AvaTrade, believes prices could move higher in the coming days "as we have seen evidence of a weaker dollar or a less hawkish Fed." "Price could test resistance at $17,500, which could open the door to the next resistance at $18,000," he added.
In other market news, there have been widespread declines. Ripple (XRP) and Dogecoin (DOGE) fall 2.7% and 3.7%, respectively. Cardano (ADA) retreats 0.3%. Litecoin (LTC) drops 0.78%, and Solana (SOL) falls 2% and is surpassed by Tron (TRX) as the fifteenth cryptocurrency by market capitalization.
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