Bitcoin prices have been undergoing a bear market with alternative assets and technology stocks.
BTC benefited from a crumbling US dollar in 2020, but that dynamic flipped, and the Federal Reserve rate hikes created a strong dollar that has sent cryptocurrencies lower.
BTCUSD – Weekly Chart
The world’s largest coin by market capitalization has tried to rally from the recent support at the July lows. The inability to spark a strong bounce is a warning sign for BTC longs.
The latest hit to cryptocurrency sentiment was a $570 million hack of the Binance exchange. The BNB coin was affected, and the exchange could limit the damage, but it is the third such large hack of a so-called crypto bridge this year.
Binance CEO Changpeng Zhao confirmed the hack: “An exploit on a cross-chain bridge, BSC Token Hub, resulted in extra BNB. We have asked all validators to temporarily suspend BSC. The issue is contained now. Your funds are safe. We apologise for the inconvenience and will provide further updates accordingly,” he tweeted.
Because the technology links different blockchains, it is susceptible to security issues, leaving a bad taste in the mouths of Bitcoin sceptics.
The market was left reeling after the summer collapse of the Terra stablecoin and decentralised finance projects. Those projects attracted significant capital flows with the world at zero percent interest rates. Still, the colossal U-turn by global central banks sucked money from those projects.
Bitcoin has also been tracking the stock markets. The Dow Jones saw a rally fade last week to close under critical support, so it may be that stocks also have another leg lower on the way.
Economic data was another headwind, with US jobs growth slowing in September. Non-farm payrolls increased by 263,000, a 17% decrease from August but more than the expected 250,000. The unemployment rate also declined to 3.5% versus expectations of 3.7%.
The latest employment figures showed further evidence that the economy is slowing, but not enough for the Federal Reserve to pivot from its recent rate hikes. The CME FedWatch tool now gives an 82.3% chance for a 75-basis point rate hike in November: much higher than 56.5% a week ago. The next question traders ask is whether there is a chance of a 100-basis point increase. The higher number seems unlikely unless the September inflation on October 13 is surprisingly high.
Bitcoin struggles for buyers at the $20,000 level, risking a drop with support around the $16,000 and $10-12,000 levels.
