Bitcoin (BTC) fell below $30,000 on Tuesday as both traditional financial markets and cryptocurrencies suffered from a sell-off caused by the U.S. Federal Reserve's aggressive monetary tightening as well as recession fears.
The last time the largest cryptocurrency by market cap fell below the $30,000 threshold was on July 20, 2021, when it hit $29,301 before rebounding.
"The recent crypto slide is strictly based on the tech share-led sell-off and not fundamentals for the cryptoverse. Bearish momentum could take bitcoin towards the $28,500 level, but that might start to be where some long-term bets come into play. The long-term fundamentals remain in place for bitcoin, but a return to record highs will take a long time. Bitcoin will start to stabilize when the bloodbath on Wall Street ends and right now many investors are still in panic-selling mode."
"If the Fed continues to raise rates through June and July, we'll probably continue to get markets going down all the way through the summer. My expectation though is that due to midterm elections coming up in November, we'll probably see the Fed pausing or even lowering rates starting at the September meeting, so that will be the catalyst. We could see the market going back up at that point."
This month the Federal Reserve raised its benchmark interest rate by 50 basis points (0.5 percentage points) and will likely do so again at its next meeting in June.
All three major stock market indexes are down, with the S&P 500 currently trading down 3.2% at 3991. The tech-heavy Nasdaq and the Dow Jones Industrial Average were also trading lower, at 11,623, or -4.5% and 32,245, -2%.
As part of this market sell-off, the correlation coefficient between bitcoin and the Nasdaq hit an all-time high of 0.8, according to data firm Kaiko. This is considered to be a strong positive correlation.
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