(Bloomberg) Bitcoin briefly fell below $42,000 for the first time since March 23 as worries over rising interest rates sent it back to its range of trades this year.
On Monday morning in Asia, bitcoin slid as low as $41,918 for the seventh consecutive day. Concerns about tighter monetary policy have dragged Bitcoin and other tokens lower since reaching a peak just above $48,000 in late March. Even the buzz surrounding Bitcoin 2022 which took place last week in Miami, wasn’t enough to halt the trend.
Economists surveyed ahead of Tuesday’s data predict U.S. inflation accelerated to 8.4% in March, the fastest rate since early 1982. Federal Reserve interest rates may have to be raised above 4%, Goldman Sachs Group Inc. Chief Economist Jan Hatzius said Friday.
Increasing expectations of tighter monetary policy has hurt demand for risky assets like cryptocurrencies and technology stocks, which are increasingly moving in tandem.
“Now the sugar rush of Bitcoin 2022 has passed, Tuesday’s (likely) ugly U.S. consumer price report is a reminder that the Fed is caught between a rock and a hard place when it comes to tackling runaway inflation without sinking the economy,” said Antoni Trenchev, Nexo’s managing partner.
Additionally, Bitcoin briefly fell below its 50-day moving average. The token traded at $42,270 at 9:40 a.m. in Hong Kong, down about 2% for the day. Ethereum dropped 2.8% to $3,196. China’s markets closed down sharply, while Australia’s and Japan’s stocks didn’t change much.
Since the beginning of the year, bitcoin has been trading in the $35,000 to $45,000 range. After briefly erasing its losses for the year above $48,000 last month, the token hit resistance around its 200-day moving average.
Miller Tabak + Co. Chief Market Strategist Matt Maley is not concerned about the selloff.
“The pullback from the late March high is more technical than anything else,” said Maley. “After its 35% rally from January to late March, Bitcoin had become very overbought. So it’s just working off that condition. As long as it can hold above $40,000, its multi-month upward trend will remain intact.”