Bitcoin continues to trade in a narrow range of $18,000-$24,000, keeping investors in the loop about where the price will move next. The crypto market has been plagued with a number of issues, ranging from collapsed projects to bankruptcies.
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Bitcoin traded below $19,000 on Wednesday morning, hitting its lowest level since June on the back of a decline in stock markets around the world and continued strength in the US dollar.
The value of the entire cryptocurrency market also fell below $1 trillion as digital coins across the board saw a sell-off.
Bitcoin was trading around $18,812.36 as of 3:50 a.m. ET, down more than 5%, according to CoinDesk. Ether, which has largely outpaced bitcoin’s gains in recent months, fell more than 8% to $1,518.59.
Central banks around the world are fighting runaway inflation by tightening monetary policy. The US Federal Reserve undertook a series of interest rate hikes totaling 2.25 percentage points. Markets expect further interest rate hikes.
The Fed’s policy tightening strengthened the US dollar, which weighed on risk assets. The 10-year US Treasury yield also jumped.
Bitcoin has traded in correlation with stocks and so if they fall, in general, so does the cryptocurrency.
“The macro environment also continues to prove challenging, with the dollar continuing to hit highs. This is impacting all risk assets as we can see,” Vice Chairman Vijay Ayyar told CNBC. corporate and international development at Crypto Exchange Luno.
“If we see the dollar starting to come back down, then we should be able to pull risk assets like bitcoin back up.”
The crypto market has been battered this year with nearly $2 trillion wiped from its value since peaking in November. Bitcoin is around 60% off its all-time high of $68,990.90 hit in November.
The selloff was caused by a tough environment for risky assets as well as crypto-specific issues including collapsed projects and bankruptcies that have spread across the industry.
Ethereum merges at the point
Bitcoin has been trading in a tight range between $18,000 and $24,000 since June. Ayyar de Luno said that when forming a bottom, “bitcoin usually likes to go back and test previous lows to see if they hold as support.”
He said that unless bitcoin breaks below $17,500, the market is likely to consolidate between $18,000 and $24,000.
Meanwhile, ether and so-called altcoins, or alternative coins, have managed to rise more than bitcoin. Ether has outpaced bitcoin since both cryptocurrencies bottomed in June.
Ether is the native cryptocurrency of the Ethereum network. Ethereum is planning a huge upgrade this month – known as a merger – which supporters say will make the network more efficient.
“Ethereum hit yearly highs against the bitcoin pair ahead of the merger,” Ayyar said. “As a result, there has been a lot more interest and activity in the Altcoin space as Bitcoin consolidates.”