Bitcoin failed to continue the rebound trend yesterday (28), and fell below the $20,000 mark again in the early morning of this (28) day, gapping down and falling below $19,000. At the same time, investors are worried that the Federal Reserve (Fed) has raised interest rates too aggressively, which could lead to a global recession.
Chicago Fed President Charles Evans sought to allay those concerns on Tuesday, saying the Fed needs to raise rates by at least another 100 basis points (four yards) this year, but he still sees strong economic growth with an unemployment rate of no more than 5%. The labor market will be able to survive the rate hike cycle.
Even so, the major U.S. stock indexes opened higher and lower on Tuesday, with the S&P 500 and the Dow Jones Industrial Average closing down 0.21% and 0.43%, respectively, while the Nasdaq Composite was almost flat, up slightly by 0.25%.
Bitcoin climbed above the $20,000 support during early Asian trading on Tuesday , but fell back to $18,532 around 12 a.m., according to CryptoRunner, and was down 7.2 percent over the past 24 hours at $18,978.38 at press time.
Jim Wyckoff, senior technical analyst at Kitco, noted that “Bitcoin bulls gained some upside early in the week, but still need to mount a more aggressive attack to break the price downtrend.”
For now, “the bears still have a slight edge in the short term,” said Jim Wyckoff.
Analysts from MICA Research, a cryptocurrency research team, said that compared with the stock market, the cryptocurrency market has performed relatively strongly. Bitcoin’s bottom of $18,500 has not been broken, and it has performed outstandingly relative to U.S. stocks.
However, the 10-year U.S. Treasury yield has soared to 4%, the two-year has climbed to 4.3%, and the dollar index has risen to 114. The analyst explained:
This shows that the market expects a strong dollar and an era of high interest rates to continue for a while, which are all putting pressure on cryptocurrency prices. Instead of buying Bitcoin, investors should buy 8% USD stablecoin collateral, 4% USD fixed deposit, or US Treasury bonds with yields as high as 4%.