Bitcoin continued to experience a downward trend, remaining weak near the $22,500 level, as investors opted for safer bets in anticipation of Federal Reserve Chair Jerome Powell’s testimony before Congress.
It is worth highlighting that investors are closely monitoring Powell’s remarks since any indication of a more hawkish stance on interest rates could aggravate market volatility, particularly in the cryptocurrency sector.
However, the sustained losses in the cryptocurrency market began after a series of positive US economic indicators were released, indicating that the economy is gaining strength and that the country no longer requires government support in the form of low-interest rates.
Consequently, traders and investors grew anxious about inflation and the possibility of interest rate hikes.
Bearish Crypto Market & Rising Inflation Concerns
The global cryptocurrency market has been experiencing losses this week, dropping from $1.11 trillion last week to $1.03 trillion as of early Tuesday. Bitcoin (BTC), the first and most well-known cryptocurrency, has been unable to arrest its decline and has fallen significantly below the $23,000 mark.
In addition, other popular cryptocurrencies such as Dogecoin (DOGE), Litecoin (LTC), Ripple (XRP), and others have also experienced minor losses. This is due to investor caution about investing in riskier assets, given the upcoming testimony before Congress by Federal Reserve Chair Jerome Powell.
Upcoming Data & US Dollar
Another factor that has been exerting pressure on the cryptocurrency market is the bullish US dollar. The US dollar has been strengthening broadly, with gains seen on Tuesday in anticipation of the upcoming testimony before Congress by Federal Reserve Chair Jerome Powell.
It is important to note that market participants will be closely watching for any significant indications from Powell that he may reconsider his plans of only a couple more rate hikes this year and that he is alarmed by the recent surge in US economic activity and inflation.
Notably, the Fed raised interest rates by 25 basis points at its latest meeting, following substantial hikes last year. However, robust economic indicators in February have raised concerns that the central bank may take more aggressive measures once again.
In the meantime, the focus is also on the final policy meeting for Bank of Japan Governor Haruhiko Kuroda on Thursday and Friday.
The current Bitcoin price is $22,400, and the 24-hour trading volume is $16 billion. Bitcoin has fallen by 0.25% in the previous 24 hours. Bitcoin is now the market leader, with a live market cap of $432 billion.
Technical analysis suggests that the BTC/USD pair is presently in a consolidation phase, with trading occurring in a narrow range between $22,000 and $22,500. A significant price movement in the Bitcoin market could occur if there is a breakout from this range, whether to the upside or downside.
If the BTC/USD pair breaks the $22,500 mark, it could trigger a bullish breakout and potentially drive the Bitcoin price toward the $22,800 or $23,250 levels. On the other hand, if the support levels at $22,000 or $21,750 are sustained, it could lead to a rebound.