Bitcoin’s hopes for a powerful year-end rally toward $100,000 are fading.
Bitcoin fell for a second day, touching its lowest price in nearly two weeks, as a barrage of bearish factors hit cryptocurrencies along with risky traditional market assets like stocks.
Bitcoin (BTC) was changing hands around $46,000 at press time. Earlier, the price of the largest cryptocurrency by market value slipped as low as $45,479 on the Bitstamp exchange, the lowest point since Dec. 4.
Cryptocurrency analysts said a new sense of bearishness may have crept into the market after this week’s announcement by the Federal Reserve that it will accelerate the withdrawal of monetary stimulus. Many investors say the U.S. central bank’s money printing over the past couple years has bolstered the cryptocurrency’s appeal as an inflation hedge. Thus, a faster withdrawal might put downward pressure on the price.
“The sell wall at $49,200 has muted all attempts to push higher and get the market believing again,” Matt Blom, head of sales and trading at the digital-asset firm Eqonex, wrote Thursday in a newsletter. “Hopes and dreams of BTC north of $100,000 have been shattered.”
According to Bloomberg News, stocks fell on Friday due to concerns that rising coronavirus cases might hit the economy again, propelled by the spread of the Omicron variant, while some tech-focused investors took profits.
Bitcoin’s recent price slide has trimmed the cryptocurrency’s year-to-date return to 60%. That compares with 24% for the S&P 500.
Edward Moya, senior market analyst for the foreign-exchange brokerage Oanda, cited reports this week that the Russian central bank wants to ban investments in cryptocurrencies in the Eurasian country.
“Bitcoin is known for exaggerated moves during illiquid conditions, and that will be pretty much the rest of the year,” Moya wrote Friday in an email. “If risk remains the dominant theme for the remainder of the year, the entire crypto space could be vulnerable to another 5% to 10% of weakness.”
This article was originally published on Coiindesk by Bradley Keoun