Bitcoin fell below $40,000 when the US stock market fell due to a more hawkish Federal Reserve. While bitcoin investors may respond to short-term oversold signals, the prospect for further gains remains restricted.
After a brief weekend rally, bitcoin fell again on Monday during regular US trading hours. The adverse price shift came as the US stock market losses increased as investors anticipated a more aggressive Fed.
The most valuable cryptocurrency briefly went below $40,000 in the early hours of the morning before rising back above $41,000. Bitcoin was trading at over $41,500 at the time of writing, down over 1% over the preceding 24 hours.
A faster rate hike and speedier normalization of the Fed’s balance sheet sent cryptocurrency values plunging for six days last week.
Tighter financial conditions will make risk assets like shares and cryptocurrency less appealing than safe-haven bonds, according to Kaiko.
According to Kaiko, the December Federal Reserve meeting boosted the relationship between bitcoin and traditional assets to a year-high.
Major Cryptocurrencies Down
On Monday, the majority of the main cryptocurrencies were also down, following in the footsteps of bitcoin. The second-largest cryptocurrency by market capitalization, Ether dipped below $3,000 before rebounding again.
Traders reacted rapidly to the possibility of monetary tightening, according to Kaiko’s piece. During the period of high volatility, bitcoin behaved strongly in the manner of a risk asset.
Following the price decline of Bitcoin (BTC) last week, the selling pressure on the cryptocurrency is beginning to ease. Cryptocurrency is holding on to short-term support around $40,000, with potential for further gains restricted to the $43,000-$45,000 range.
Bitcoin (BTC) has lost around 2% in the last 24 hours, although price fluctuation has been moderate.
Rallying from oversold levels, the relative strength index (RSI) has increased. When it comes to daily data, the relative strength index (RSI) is at its most oversold level since December 10.
Because of BTC’s two-month-long decline, the upside impetus has decreased. This suggests that sellers may continue to be active near resistance levels.
