Bitcoin (BTC-USD) has slid 2.7% in Wednesday late afternoon trading as Federal Reserve policymakers suggested that its interest rate increases could lead the U.S. to a recession.
The cryptocurrency changed hands at $23.29K at 4:15 p.m. ET, down from nearly $25K at the beginning of this week. Ethereum (ETH-USD), was also off 2.3% to $1.84K, down from as high as $2K on August 15. Note that both tokens were already trading in negative territory before the minutes came out.
“Technical analysis tells us that Bitcoin faces a critical test over the coming days, as the 200 weekly moving average sits just below the current price of $23,700, at around $23,000 – failing to hold this level, will suggest there is further downside to come over the following weeks and the market’s reversal may be delayed,” said GlobalBlock analyst Marcus Sotiriou.
In the broader equity market, all three major stock indices were knocked lower, with the Dow Jones (DJI) -0.5%, S&P 500 (SP500) -0.7% and tech-heavy Nasdaq (COMP.IND) -1.3%. The weakness came after a weaker-than-expected growth rate in July’s retail sales, which appeared to have outweighed a slightly dovish Fed minutes amid bearish price action.
As the Federal Open Market Committee’s minutes from its July 26-27 meeting revealed concerns about hiking the central bank’s policy rate too aggressively, traders accelerated their bets for softer rate increases at its upcoming meeting on September 21. Specifically, they see a 61.5% probability of a 50-basis point hike vs. a 38.5% chance of 75bps, according to CME’s FedWatch tool. Just a day before the minutes released, the probabilities were for a 59.0% chance of a 50-bp increase vs. 41.0% chance of a 75-bp hike.
Crypto-related stocks: MicroStrategy (MSTR) -5.4%, Coinbase Global (COIN) -4.8%, Galaxy Digital (OTCPK:BRPHF) -5.8%, Bitfarms (BITF) -10.4%, Marathon Digital (MARA) -8.2% and Riot Blockchain (RIOT) -7.5%.
Earlier this week, (August 16) bitcoin, ether give up some gains as traders’ risk tolerance narrows.