(Bloomberg) — Bitcoin declined in early Asia trading on Tuesday as investors fretted about the prospect of higher interest rates.
The largest cryptocurrency fell as much as 2.3% to $63,414 by 9 a.m. in Singapore, its lowest level in 11 days. Second-largest token Ether was down 3.6%.
Citadel Securities expects the US Federal Reserve to raise rates by a quarter percentage point on Wednesday, a surprise move that it said would strengthen Chairman Kevin Warsh’s credibility in the battle with inflation. Traders see a roughly one-in-three chance of a rate hike. Rising borrowing costs tend to drive investors away from risk assets such as cryptocurrencies.
“Bitcoin is mainly getting hit by the rising probability of a Fed hike, as well as macro concerns about AI-related credit risks,” said Caroline Mauron, co-founder Orbit Markets. “The next level to watch on the downside is $62,000, with strong support expected around $60,000.”
Bitcoin has been making modest gains over the past month amid hopes it has found a floor after crashing around 50% from a record $126,000 in October. But heavy outflows from US-listed Bitcoin exchange-traded funds late last week underscore the fragility of its recent recovery. The ETFs saw more than $465 million of outflows on July 23 and July 24, snapping a seven-session inflow streak.
Rate-hike concerns are overshadowing recent momentum behind the Clarity Act, a long-awaited US cryptocurrency market-structure bill.
“We are currently holding a neutral bias on Bitcoin,” said Tony Sycamore, an analyst at IG Australia. “A sustained break and close above the 200-day moving average (currently at $72,001) is still needed to negate medium-term downside risks, bring a buzz back to Bitcoin and to allow a more constructive technical picture to emerge.”
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