Bitcoin and other cryptocurrencies dropped like equities on Tuesday as investors remained concerned that the Federal Reserve will continue to raise interest rates at a painful pace.
Analysts are still pessimistic about cryptos, despite the fact that prices have risen from the lows reached following the collapse of exchange FTX.
Bitcoin has dropped 2% in the last 24 hours to $16,950, breaking through the critical $17,000 support. However, Bitcoin has recently climbed upward since FTX’s collapse rocked markets and raised anxieties throughout the sector, but it remains vulnerable amid widespread investor pessimism.
“It is fascinating to see how resilient Bitcoin has performed over the last few days, but a sustained move higher seems unlikely,” said Edward Moya, an analyst at broker Oanda.
The correlation between equities and cryptocurrency has, at the very least, boosted digital assets in recent days, with tokens rising with the Dow Jones Industrial Average and S&P 500 as investors expect more accommodating monetary policy from the Fed.
In a study released Monday, a team of analysts at cryptocurrency exchange Bitfinex commented that the risk on trades has undoubtedly crept back into the markets. However, the stocks and Bitcoin were appearing and feeling more bullish over the last seven days.
Some of that optimism vanished in a Monday fall that impacted cryptos on Tuesday, fueled by economic data that implies the Fed may be able to keep rising interest rates. It highlights the correlation’s double-edged sword, with Bitcoin and its peers vulnerable to both equity-led sell-offs and equity-led rallies.
In the short term, analysts are still broadly gloomy about Bitcoin, which is selling at about a quarter of its all-time high of November 2021 and has fallen nearly 20% in only a month as a result of FTX’s collapse and its ripple effects.
Katie Stockton, the managing partner at Fairlead Strategies, commented about the recent situation that while the negative long-term momentum has eased, we would still respect lower highs and lower lows, which characterize the current downtrend.
According to Stockton, the short-term barrier for Bitcoin is $17,600, a level it fell short of during a recent increase — which indicates the range will possibly decrease even lower.
Beyond Bitcoin, the second-largest cryptocurrency, Ether, fell 3.5% to $1,250. Smaller cryptos or altcoins performed similarly, with Cardano and Polygon both losing 3%. Memes Coins were much weaker, with Dogecoin down 6% and Shiba Inu down 5%. This data indicates that it is better to refrain from investing in crypto now.