Cryptocurrencies fall sharply; "Bitcoin is overbought"
Sharp falls of 2.6% in the cryptocurrency market. Bitcoin (BTC) retreats more than 1% in the last 24 hours and is again well below $23,000 after overcoming this resistance for the third time in the last 4 days; for its part, Ethereum (ETH) drops about 5% and trades around $1,550.
"Bitcoin has been very choppy in recent days, trading largely between $22,300 and $23,300. That's a fairly tight range but importantly, it's not really given back any of the extraordinary gains it enjoyed over the last couple of weeks," stated Craig Erlam, market analyst at Oanda.
The truth is that almost everything about digital asset prices remains positive, with much of the market convinced that the Federal Reserve (Fed) will moderate its stance this year and macroeconomic readings indicating cooling inflation and slowing economic growth. However, another significant number of investors remain skeptical about the market rally, believing that the bottom has not yet been reached.
For Naeem Aslam, chief market analyst at AvaTrade, this is because "the BTC price needs to break above the 30K price mark, which is a major resistance for now. More importantly, the RSI on the daily time frame shows that the price is overbought, and a retracement is likely to happen. "
"Cryptos' are at their highest level since August, but hopes are pinned on Fed’s dovish monetary policy stance and more weakness in the dollar index. The values of cryptocurrencies are still being driven mostly by macro issues, and many investors use them as a barometer of risk sentiment across a wide range of assets," he added.
Matt Weller, global head of research at FOREX.com, takes the same stance as he stressed that much of these rallies are due to FOMO (fear of missing out). "Traders thought that they would have all this year to buy near the lows.Now that we start to see prices picking up, we're starting to see a lot of those traders throw in the towel and just jump in to make sure that they don't miss the big surge off the bottom that we're now seeing," he noted in an interview with 'CoinDesk TV'.
For his part, Joe DiPasquale, CEO of cryptocurrency fund manager BitBull Capital, acknowledged that he would not be surprised to see Bitcoin test $20,000 in the next few days. "The market has risen, partially fueled the short squeeze. For the week ahead, market participants should be mindful of downside risks and potentially seek to take profits," he explained.
"When all the dust settles from Q4 GDP, the Fed’s preferred inflation gauge, and the FOMC decision, strong resistance should come from the $25,000 level. Bitcoin’s rally is about to get very interesting or it could be ripe for a short-term pullback," added Edward Moya, senior market analyst at Oanda.
In parallel, Genesis acknowledged in New York bankruptcy court that it is close to reaching an agreement with its creditors, while Gemini exchange accused the crypto-lender of being one of the main causes of its latest job cuts. Binance was also in the news again after it became known that it mistakenly mixed client funds with the assets backing some of the tokens issued by the world's largest crypto exchange; on the other hand, it has become known that the investigated exchange Bitzlato used Binance to move more than $300 million in Bitcoin.
In other market news, sharp drops of 3% for Ripple (XRP) and falls of more than 5% for Cardano (ADA), Dogecoin (DOGE) and Polkadot (DOT). Solana (SOL) and polygon (MATIC) plummet more than 6%.