Good morning. Here’s what’s happening:
Prices: Bitcoin and other major cryptos decline.
Insights: South Korea’s government is taking a harder look at cryptocurrencies.
Technician’s take: Long-term momentum remains negative, capping upside moves in price.
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Bitcoin (BTC): $29,784 -6.2%
Ether (ETH): $1,818 -6.2%
Bitcoin and Other Cryptos Sink
Investors on Wednesday decided that bitcoin wasn’t such a good deal after all – or nearly any other major cryptocurrency, for that matter.
The largest cryptocurrency by market capitalization was recently trading just below $30,000, a more than 6% drop over the past 24 hours that relinquished much of the gains posted during a U.S. holiday weekend surge. Bitcoin was changing hands over $32,000 as recently as Tuesday morning as markets responded to the relaxation of COVID-19 restrictions in China and the faint possibility that the U.S. central bank might relax its monetary hawkishness much later this year.
All that good faith had faded into the mists by early Wednesday, with investors returning whole hog to the risk-aversiveness that has colored their moves for much of the past eight months. Ether was also down over 7% over the same period, trading at about $1,800. Other major cryptocurrencies sank even deeper with Luna Classic (LUNC), the new name for the original LUNA on the Terra protocol, falling 61% at one point. SOL and ADA both declined about 12%, while DOT was down roughly 9%.
“Bitcoin’s price action today is not entirely surprising,” Joe DiPasquale, the CEO of crypto fund manager BitBull, wrote to CoinDesk. “Not only is it facing pressure from traditional markets, it has also been struggling to breach the resistance zone between $31K-$32K, resulting in a breakdown from the range it set over the weekend.”
Major stock indexes dropped with the tech-heavy Nasdaq and S&P 500 each closing off 0.7% as investors renewed their concerns about high inflation and the prospect of recession. Gold and the 10-year Treasury yield both rose.
At a business conference Wednesday, JPMorgan Chase CEO, and crypto skeptic, Jamie Dimon told investors and analysts the bank would be conservative with its balance sheet, and to prepare for rough economic times. Dimon said he was worried about central bank quantitative tightening and the continued fallout from Russia’s invasion of Ukraine. “Right now, it’s kind of sunny, things are doing fine, everyone thinks the [U.S. Federal Reserve] can handle this,” Dimon said. “That hurricane is right out there, down the road, coming our way.
Bitcoin closed May, a historically strong month, well in the red, although it outpaced altcoins. That reflected investors preference for the digital asset considered least risky. Still, BitBull’s DiPasquale was skeptical that Bitcoin could turn upward quickly. ”Moving forward, Bitcoin will need to see significant buying activity and a major sentiment shift for any hopes of a quick reversal,” he wrote.
S&P 500: 4,101 -0.7%
DJIA: 32,813 -0.5%
Nasdaq: 11,994 -0.7%
Gold: $1,846 +0.5%