With investors focusing on the Federal Reserve’s policy decision next Wednesday, the stock market and cryptocurrency market came under pressure on Friday, with the three major stock indexes pulling back and the Nasdaq leading the decline, down nearly 1%.
Bitcoin, which had fallen from its all-time high, briefly dropped to around $66,000 in the early hours of the morning in the Eastern United States. By the close of the US stock market, it rebounded to around $68,000, with a 24-hour decline of 4%.
The decline in Bitcoin prices triggered a sell-off in the entire market, with the global cryptocurrency market value falling 4.1% to $2.59 trillion that day. The second-largest cryptocurrency, Ethereum, hit a weekly low, falling over 4% to $3,670. BNB and XRP also experienced significant fluctuations, while meme coins like Dogecoin (DOGE) and Shiba Inu (SHIB) fell nearly 10%. However, the native token of the Solana network, SOL, rose against the trend, rising 5.5% during the same period.
The volatility of global risk sentiment has impacted the cryptocurrency market. Although investors generally expect Federal Reserve officials to maintain interest rates at the upcoming policy meeting next week, they are hoping for further clarity on when the Fed may start cutting rates.
At the same time, US consumers seem less optimistic, as the monthly University of Michigan consumer sentiment index released on Friday was below economists’ expectations.
Tim Courtney, Chief Investment Officer at Exencial Wealth Advisors, said, “Market sensitivity to interest rates is returning.”
Shannon Sacccocia, Chief Investment Officer at NB Private Wealth, said, “The upcoming Federal Reserve meeting may be more important or influential than we imagined.”
Tony Sycamore, Market Analyst at IG Australia Pty, wrote in a report that Bitcoin was “weakened by rising US yields and the strength of the US dollar after the release of producer price inflation data.”
Funding rates reached their highest level since 2021. According to IntoTheBlock in this week’s On-Chain Insights, the amount paid by Bitcoin perpetual swap buyers to shorts reached its highest level since October 2021. The exceptionally high funding rates indicate a strong bias towards long positions in the market. Analysts pointed out that BTC funding rates on Binance and Bybit reached levels of 0.06% and 0.09% yesterday, meaning that the annualized cost of going long on Bitcoin is 93% and 168% respectively.
The decline in BTC was accompanied by signs of increasing caution in the derivatives market. According to CryptoQuant data, the financing rates or costs of Bitcoin perpetual futures positions have dropped significantly. These futures are popular among speculators because they do not have fixed expiration dates.
Dessislava Aubert, an analyst at Kaiko, said, “We have experienced a wave of long liquidations, which intensified the sell-off. Looking at the accumulated BTC trading volume in the past 24 hours, the selling pressure on Binance and Bybit began to accumulate at the end of the Asian trading session and then spread to other markets.”
Kris Marszalek, CEO of Crypto.com, said on CNBC’s “Squawk Box” on Friday that the selling pressure may come from the options market, and he said, “I think this is a healthy move, and we are removing some of the leverage built up in the system.”
Meanwhile, some traders warned that there could be further losses in the coming weeks before the price ultimately rebounds.
Alex Kuptsikevich, Senior Market Analyst at FxPro, said in a report, “New all-time highs trigger sell-offs. Some participants are taking profits, which raises the question of whether there will be enough buyers at current levels or if most people are willing to wait for a deeper correction.” Kuptsikevich’s analysis using the Fibonacci retracement tool, which predicts potential price support and resistance levels, highlighted the 60,000-60,500 and 65,000-65,500 regions as important support levels to watch.
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Tags:
2023 Market Trend
SOL
XRP
Ethereum
Binance Coin
Bitcoin
Liquidation
Dogecoin
Federal Reserve
Market Trend
Funding Rates
Inflation
Rate Cut
Note: All articles from Bitpush represent the author’s viewpoint and do not constitute investment advice.
Original article link: https://www.bitpush.news/articles/6406156
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