Bitcoin sank to a one-week low on Tuesday, buffeted by nervousness ahead of a looming Federal Reserve interest-rate hike and amid harsher regulatory scrutiny of the cryptocurrency sector.
The largest token dropped as much as 5.4 per cent on Tuesday in Asia and was trading at $21,073 as of 9:42 a.m. in Singapore. The MVIS CryptoCompare Digital Assets 100 gauge shed more than 4 per cent.
The retreat has put a dent in hopes for a sustained Bitcoin rebound and returned the token to a trading range between roughly $19,000 and $22,000. Risk appetite is generally on the back foot before an expected 75 basis-point Fed rate rise Wednesday, part of a tightening cycle that’s sapping liquidity.
“We’ve had some stabilisation over the past few weeks and that gave some folks confidence that perhaps a bottom was being put in place,” Katie Stockton, co-founder of Fairlead Strategies, said on Bloomberg Television. “We’re not so convinced.”
Rising interest rates and high-profile meltdowns like that of crypto hedge fund Three Arrows Capital have pummeled digital tokens this year. Bitcoin is down 55 per cent over the period.
The turmoil is leading to ever greater regulatory oversight of the industry.
Coinbase Global Inc., for instance, is facing a US probe into whether it improperly let Americans trade digital assets that should have been registered as securities, according to three people familiar with the matter.
©2022 Bloomberg L.P.
July 26, 2022