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The US Federal Reserve building in Washington. The Fed’s aggressive approach to monetary policy has to subside before cryptocurrency markets see a bottom, analysts say. Photo: Reuters

Bitcoin resumes slide amid mounting concerns about recession

  • Bitcoin has made ‘a bottom’ but probably not ‘the bottom’, analyst says
  • The largest cryptocurrency declines by as much as 2.9 per cent, holds above key US$20,000 level
Bitcoin resumed its fall on Wednesday, moving in tandem with weakening stocks amid mounting concerns about a global recession.
The largest cryptocurrency declined as much as 2.9 per cent to US$20,244, holding right above the key US$20,000 level. Ether fell by a maximum 3.3 per cent to US$1,084.80. Shiba Inu, the 14th-biggest cryptocurrency by market cap, rallied 21 per cent in the past 24 hours although its momentum was tailing off, according to pricing from CoinGecko.

“Bitcoin has made ‘a bottom’ but probably not ‘the bottom’,” said Mark Newton, head of technical strategy at Fundstrat Global Advisors. “Upside targets should materialise near US$23,300 with a max near $24,800 before prices pull back to likely challenge lows into the final week of June.”

Cryptocurrencies have been moving for months in the same direction as stocks, and Wednesday’s moves were no exception, as investor appetite for risk assets ebbed on growing fears about an economic downturn. Bitcoin appears to be consolidating around the US$20,000 level, similar to its action around US$30,000 for much of May and into June.

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The move off of sub-US$20,000 lows occurred as broader risk sentiment stabilised and speculative investors await their next trading prompts, Informa Global Markets wrote in a note on Tuesday.

The firm added that data from on-chain analytics firm Glassnode shows that as of June 20, 56.2 per cent of addresses were still worth more in dollar terms than when their coins entered them, which Informa said raises questions about the severity of the current bear market. That is compared with recent Glassnode data showing the average purchase price of all Bitcoins in circulation was around US$23,430 – so, above current levels.

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Still, it’s the bigger picture that is really driving Bitcoin’s price, Informa said. “Macroeconomic conditions need to improve and the Fed’s aggressive approach to monetary policy has to subside before crypto markets see a bottom,” the firm wrote.