Bitcoin plunges to $40K as dollar rises
Bitcoin Price Struggles to Recover After Fed Entered Aggressive Tightening Cycle
Bitcoin’s price plunged to an intraday low of $40,269 on the Bitstamp exchange earlier today.
The flagship cryptocurrency is down about 4% in the past 24 hours. It is now dangerously close to retesting the $37,000 support level.
The US dollar index (DYX) has risen above 100 for the first time since May 2020 during the US Federal Reserve’s walking cycle. The greenback’s ongoing rally shows strong risk-out sentiment.
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Goldman Sachs believes that the Fed will raise benchmark interest rates by 50 basis points in May and June to curb inflation.
Mike Novogratz recently predicted that Bitcoin price could rise again if the Fed pauses monetary tightening. However, the central bank may not change course soon because of continued high inflation.
The 10-year US Treasury yield peaked in three years earlier in the day and rose to 2.78% earlier in the day. As reported by U.Today, former BitMEX CEO Arthur Hayes recently predicted that Bitcoin’s price could drop to $30,000 by the end of the second quarter, leading to a broader “crypto carnage”. Bitcoin’s correlation with the tech-heavy Nasdaq 100 index, which includes stocks like Tesla and Microsoft, recently hit another all-time high. This could be bearish for Bitcoin due to the recent underperformance of technology stocks.
The price of the best cryptocurrency is currently 41.43% below its record high. Bitcoin is still up 23.25% from its 2022 low of $32,950.
Last week, veteran trader Peter Brandt opined that the next bull market cycle may not begin until 2024.