Bitcoin Tests Almost 2-Year Lows; Ether Extends Post-Merge Slide
Cryptocurrencies lingered near almost two-year lows as digital-asset investors sought a fresh catalyst with central bank rate increases depressing demand for riskier assets.
Bitcoin, the largest token by market value, fluctuated around $19,000 for a third day. Earlier, it slid as much as 4% toward levels last seen in late 2020. Second-biggest coin Ether continued to underperform, shedding 3%, and it is now down about 20% since a much-touted network upgrade last week.
Markets are shuddering at the Federal Reserve’s determination to fight inflation by constricting financial conditions. Shorter maturity Treasury yields jumped more than longer tenor rates, deepening a bond curve inversion seen as a signal of recession. A dollar gauge was at a record as investors sought a bolthole.
Such a backdrop offers little respite for crypto markets. They were already reeling from a $2 trillion plunge from a 2021 record high, an unraveling pockmarked with blowups such as the Three Arrows Capital hedge fund and the Terraform Labs project -- whose co-founder Do Kwon is wanted by authorities.
“If the Fed keeps tightening, unless it implements yield curve control to keep the curve positively sloped, the crypto system will see a lot more failures,” said Brian Pellegrini, founder of Intertemporal Economics. “At the end a few very rich champions will emerge, but in the meantime there will be blood in the streets.”