Rate hike panic spreads to crypto assets, Bitcoin falls below $42,000 again

Zhitong Finance observed that the price of bitcoin fell below $42,000 in today's trading for the first time since March 23, mainly due to growing concerns about rising interest rates.

On Monday morning, bitcoin fell as low as $41,918. The coin has been weighed down by investor concerns over Fed tightening since peaking just above $48,000 in late March. Economists polled expect U.S. inflation to hit 8.4 percent in March, the highest level since early 1982. The data will be released on Tuesday. Goldman Sachs chief economist Jan Hatzius said on Friday that the Fed may need to raise interest rates above 4% to keep inflation in check.

Investor expectations of tighter monetary policy have hurt demand for riskier assets such as cryptocurrencies and tech stocks. “Bitcoin’s 2022 ‘rise period’ is over, and Tuesday’s U.S. CPI report will remind us that the Fed is in a dilemma between controlling inflation and preventing an economic downturn,” commented Antoni Trenchev, managing partner at Nexo.

In addition, Bitcoin briefly fell below the 50-day moving average. As of press time, the coin fell 1.93% this week to $42,011 per piece.
Bitcoin has fallen near its 50-day average

So far this year, Bitcoin has mostly traded between $35,000 and $45,000. The currency broke above $48,000 last month, briefly recouping its losses for the year, but hitting resistance near its 200-day moving average.

Miller Tabak + Co. Chief market strategist Matt Maley said he did not see the selloff as particularly worrisome. He said that from January to the end of March, Bitcoin rose 35% and the coin was already overbought. Therefore, the main reason for the pullback from the late March highs is technical factors. As long as the coin can sustain above $40,000, its multi-month uptrend will remain intact. "

In addition, it is observed that at present, the trend of Bitcoin and high-risk assets such as US technology stocks is showing a synchronized trend, and its correlation with the Nasdaq 100 index has risen to a record level.

Source: Zhitong Finance APP