Bitcoin continues to reel under the pressure of marketwide turmoil that has seen BTC prices slip by over 10% this week.
Albeit surging close to $40,000 on Wednesday following the relief of less hawkish sentiments driven by the Fed’s rate hike, Bitcoin fell sharply yesterday, bottoming out at $35,700 before closing at roughly $36,500. Today, BTC continues to trade in pretty much the same closing price range, with the entire crypto market experiencing a shakeout.
According to Coinglass, the total number of liquidations in the past 36 hours has exceeded $427 million with Bitcoin, Ethereum, STEPN (GMT) and APE leading in the carnage after $200M, $69.18M, $12.42M and $12.24M in the respective tokens was wiped out. Overall, 111,762 traders were liquidated.
Factors At Play
The crypto sell-off has been linked to a powerful wave of risk aversion that also shook the US stock market with stocks pulling back sharply, delivering investors one of the worst days since 2020. The heavily crypto correlated Nasdaq-100 slumped by over 5% Thursday afternoon to finish at $12,317.69. This drop was also reflected in major tech stocks including Meta, Amazon, and Apple which all fell by over 5%.
The Dow Jones Industrial Average also fell over 3.3% to close at $32,690 with the S&P 500 giving back just over 3.6% to settle at $4,103 marking its second-worst single day this year.
On Wednesday, the Fed increased its interest rate by 50 basis points as promised, with Fed Chair mulling a more aggressive approach toward reducing its balance sheet. Usually, an increase in interest rates can put pressure on growth-oriented stocks as they make far-off earnings less attractive to investors.
Bitcoin’s Recoil Worsens
Despite Bitcoin’s on-chain accumulation disregarding Fed’s tightening omen, Thursday’s sell-off seems to have further deteriorated the cryptocurrency’s technical profile as veteran analyst Peter Brandt warns of BTC plunging to $28k.
Just hours after the price attempted to break and close above the $40,000 psychological level on Wednesday to no avail, Bitcoin fell below the $37,500 support. For now, the price is staring at the possibility of plunging to the February low of $34,400 or further down to January’s $33,000. After that, the price could easily roll over to the multi-year support at $28,000.
However, there is no guarantee that price could act that way, especially considering the amount of volatility in the markets right now.