Bitcoin and major altcoins have been experiencing another tough and volatile week, with the king of cryptocurrencies posting a fresh three-month low on Thursday mainly on the back of a more hawkish than expected FOMC meeting. Apart from that, the US regulatory crackdown continues to rattle the sector, while AI mania continues to steal the limelight as the most innovative trend in markets. Will cryptocurrencies manage to turn the tables?
Macro catalysts weigh on cryptos
During this week, we saw digital asset prices being driven by macroeconomic developments but confirming once more that they have largely decoupled from stocks. On Tuesday, Bitcoin and other major altcoins gained ground after the release of a softer-than-expected US CPI print, which guaranteed that the Fed would keep rates steady.
However, cryptocurrencies shed those gains and retreated even further following the latest FOMC meeting. Even though the Fed decided to pause its interest rate hiking campaign for now, it signalled a higher than previously projected terminal rate, delivering a huge blow to crypto markets. Interestingly, stocks extended their 2023 rally, appearing unhindered by the Fed’s hawkish stance.
The recent weakness in crypto prices is also evident in the famous Bitcoin Fear and Greed index, which fell to 41 its lowest level since March 12. Moreover, some altcoins did not survive the recent selloff, with Tether (USDT) posting its biggest drop since November and losing its peg to the US dollar.
Regulatory concerns are here to stay
In the past two weeks, we have seen an orchestrated crackdown by the US Securities and Exchange Commission (SEC) in its effort to regulate the widely traded digital coins as securities. The SEC sued two of the largest crypto exchanges in the world for a series of violations, leading to significant outflows as traders prefer to play safe amid the latest regulatory backlash. As a result, cryptocurrencies are unlikely to post significant gains as long as investors are grappling with all these liquidity and solvency concerns, especially when the AI-driven rally in stock markets is in play and acts as a perfect alternative for risk-seeking investors.
BlackRock to launch crypto ETF
On a positive note, it seems that crypto adoption efforts from some big players in the financial world are increasing. The world’s biggest asset manager, BlackRock, has taken initial steps to launch the first spot-Bitcoin ETF in the US. If approved by the SEC, this ETF would allow investors to gain easy and safe exposure to Bitcoin within the US, shrugging off most regulatory risks.
Technical levels to watch
Taking a technical look at BTCUSD, we can see that the price posted a fresh three-month bottom of $24,750, extending its bearish structure of lower highs and lower lows from its 2023 peak. Moreover, the price is closing the gap with its 200-day simple moving average (SMA), where a potential dive below it could trigger a significant retreat.
If the price extends its short-term slide, it could initially face the three-month low of $24,750. Even lower, the $21,375 hurdle could provide downside protection.
Alternatively, bullish forces could propel Bitcoin towards the recent resistance of $27,500. If that barricade fails, the spotlight could turn to $28,460.
