Bitcoin price: Cryptocurrency adds to Its December losses; Ether also in red | Tech News

Bitcoin price: Cryptocurrency adds to Its December losses; Ether also in red

Bitcoin price: Cryptocurrency extended losses, deepening its December decline and veering from risk assets such as stocks and junk bonds that continued to notch gains.

By:BLOOMBERG
| Updated on: Aug 21 2022, 23:03 IST
Bitcoin price
Bitcoin price: Cryptocurrency fell as much as 6.5% on Tuesday and was trading at about $47,760 as of 12:37 p.m. in New York (REUTERS)

Bitcoin price: Cryptocurrency extended losses, deepening its December decline and veering from risk assets such as stocks and junk bonds that continued to notch gains. The token fell as much as 6.5% on Tuesday and was trading at about $47,760 as of 12:37 p.m. in New York. Ether, the second-largest coin, and the Bloomberg Galaxy Crypto Index were also in the red, with each falling about 7%. Smaller tokens such as Solana, Cardano, Polkadot and meme token Dogecoin also lost ground Tuesday, according to tracker CoinGecko.

Investors have retreated from some of the most speculative corners of global markets of late, worried that an ebbing tide of central bank stimulus could spell trouble. Just how exposed Bitcoin and the wider digital-asset universe are to that risk is the subject of heated debate. Meanwhile, with the Federal Reserve seen ready to take action as needed to stem rising prices, Bitcoin's appeal among those who see it as a potential inflation hedge may be dimmed.  

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Matt Maley, chief market strategist for Miller Tabak + Co., said it's strange to see cryptocurrencies selling off into year-end because many have been big winners in 2021 despite recent bouts of turbulence. But institutional investors might be behind this week's declines, he said. 

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If these investors got to the party late, “their gains in cryptos are not as large -- in fact, some of them probably have losses,” Maley said. “Therefore, they might be paring back their holdings a bit and adding to their exposure” elsewhere, such as equities.

Bitcoin has largely moved in tandem with riskier assets like U.S. stocks this year, though that pattern looks to be breaking down this month. The S&P 500 index of the largest companies is up about 5% so far in December, while Bitcoin has lost some 16%. This is the first month since June that their performances have diverged.

Technical studies suggest something of a tipping point for Bitcoin following a retreat from an all-time high of almost $69,000 in November, which has trimmed its year-to-date advance to almost 70% from more than 100% at the peak.

For instance, a study using Bollinger bands -- a popular way of looking at volatility -- shows the virtual coin touched the upper band in the past week but failed to close above it. For some, that suggests Bitcoin may face difficulty making gains in the short term.

In addition, Bitcoin on three occasions failed to meaningfully break out above $52,000. It briefly did so on Monday before finishing the session much lower. But the coin might find support at its 200-day moving average around $47,600.

Read more: Bitcoin Went Mainstream in 2021. It's Just as Volatile as Ever

Katie Stockton, founder and managing partner of Fairlead Strategies, an independent research firm focused on technical analysis, says Bitcoin's next level of support is around $44,200, based on a Fibonacci retracement level. 

The $50,000 level isn't as important in her view “but it does hold psychological significance,” she said. “Bitcoin is in a consolidation phase, and seems to be reacting to the short-term overbought condition.”

Still, Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno in Singapore, says that for Bitcoin overall, there isn't “anything worrying at this point.” The digital coin's prospects remain “bullish” if the $48,000 to $49,000 level holds, he added.

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First Published Date: 29 Dec, 00:37 IST
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