Bitcoin declined in early Asia trading on July 28 as investors fretted about the prospect of higher interest rates.
The largest cryptocurrency fell as much as 2.3 per cent to US$63,414 (S$81,937) by 9am in Singapore, its lowest level in 11 days. Second-largest token Ether was down 3.6 per cent.
Citadel Securities expects the US Federal Reserve to raise rates by a quarter percentage point on July 29, 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 US$62,000, with strong support expected around US$60,000.”
Bitcoin has been making modest gains throughout July amid hopes it has found a floor after crashing around 50 per cent from a record US$126,000 in October.
But heavy outflows from US-listed Bitcoin exchange-traded funds (ETFs) late last week underscore the fragility of its recent recovery. The ETFs saw more than US$465 million of outflows on July 23 and 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 US$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.” BLOOMBERG