Bitcoin rebounded Monday afternoon after it briefly fell below $40,000, a key support level, amid mounting concerns for a more hawkish Federal Reserve, as economists at Goldman Sachs now expect four interest-rate increases in 2022.
Bitcoin BTCUSD, -1.95% traded at as low as $39,678 on Monday, the lowest level since September 2021, while it later traded up at around $41,684. The number is still down about 1% over the past 24 hours and down 40% from its all-time high of $68,991 in November.
Dow Jones Market Data
From the technical perspective, short-term momentum is to the downside, while the next major support is near $37,400, Katie Stockton, founder and managing partner of research firm Fairlead Strategies wrote to MarketWatch in an email.
However, there are “new signs of downside exhaustion” during the weekend as suggested by the DeMARK technical Indicators, Stockton wrote. The signs are “among our preferred overbought/oversold gauges, that lead us to maintain a neutral short-term bias,” Stockton wrote.
The aggregated open interests of bitcoin futures, which refer to the total outstanding number of futures contracts, is down almost 40% from its November high, indicating lower participation, according to data from crypto derivatives site Coinglass.
Meanwhile, crypto funds saw a record net outflow of $207 million for the week ending Jan. 7, marking the fifth consecutive week of outflow, according to a Monday report by CoinShares. Investors remain “very bearish,” as bitcoin saw $107 million outflows for the week, the report shows.
“There haven’t been investors willing to come in to buy the dips like we had earlier in the year. ” Anthony Denier, CEO of trading platform Webull, told MarketWatch. “With little new capital coming into the market it’s hard to see when this turns around.”
Investors’ sentiment remains negative, while “if inflation coming in lower than expected, that might turn this around,” Denier said.
Investors have been waiting for the U.S. consumer-price index data to be released on Wednesday, as a print above forecast may substantiate the Fed’s hawkish stance.
Most other major cryptocurrencies have also been trading lower. Ether ETHUSD, -4.36% is trading at around $3,040, after it fell below $3,000 briefly on Monday. XRP XRPUSD, -4.62% lost 4% over the past 24 hours to about $0.72. Solana SOLUSD, -5.73% is trading 7% lower to $133. Terra is recently trading at around $68.9, down 5% over the past trading session. Cardano ADAUSD, -5.01% logged a 5.9% loss, trading at around $1.12. Cosmos ATOMUSD, +4.20% is trading 3.2% higher at around $37.47.
U.S. stocks remained lower, but well off its lows of the session, Monday afternoon, as the benchmark 10-year Treasury yield briefly rose above 1.8%. The Dow Jones Industrial Average DJIA, -0.79% fell 234 points, or 0.7%, to about 35,991. The S&P 500 index SPX, -0.59% declined 25 points, or 0.6%, to around 4,651. The Nasdaq Composite Index COMP, -0.54% lost 90 points, or 0.6%, to 14,840.