Bitcoin and other cryptocurrencies were lower on Tuesday as the digital asset space remained under pressure. Investors across asset classes remain downbeat, and the picture for crypto continues to look cloudy.
The price of Bitcoin fell 2% over the past 24 hours to $21,000. That’s less than one-third of the largest crypto’s all-time high near $69,000 in November 2021, but above its bottom of under $18,000 earlier this month.
“Bitcoin has stabilized after a reaction to short-term oversold indications last week, supporting a short-term neutral bias within a bearish long-term trend,” said Katie Stockton, managing partner of technical research group Fairlead Strategies.
“Risk remains elevated given the recency of the major breakdown below $27,200, with intermediate- and long-term momentum still strongly negative,” Stockton added.
Bitcoin’s plunge to its lowest levels since 2020 has come in tandem with stock market declines. The S&P 500 has moved into a bear market this year amid fears that the Federal Reserve’s path to continue hiking interest rates against the backdrop of multi-decade high inflation could spur a recession.
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Cryptos should theoretically trade independently of mainstream financial markets, but have shown themselves to be largely correlated with other risk-sensitive assets, like stocks. A recession likely would be as painful for digital assets as equities. Compounding problems for cryptos have been pressures unique to the digital asset space, including large leveraged positions being wiped out and trouble among crypto financial service providers.
“Bitcoin remains a risky asset with a strong correlation to equities, which means it probably won’t be seeing any support anytime soon,” said Edward Moya, an analyst at broker Oanda. “The mood for risky assets is to fade all rallies, which means Bitcoin should remain trapped in its tight trading range a little while longer.”
It was more of the same elsewhere in the crypto space. Ether, the second-largest digital asset, fell less than 1% to $1,200. The token underpinning the Ethereum blockchain network began the month around $2,000 and dropped as low as near $900 by June 18, having traded near $4,900 in November 2021.
Smaller cryptos, or altcoins, were even lower. Solana lost 5% and Cardano was 2% in the red. It was even worse for memecoins, with Dogecoin and Shiba Inu both down about 6%.
Write to Jack Denton at jack.dentondowjones.com