Bitcoin Keeps Falling. Where It Could Stop and Why the Fed Isn’t Helping.

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Bitcoin
and other cryptocurrencies slipped Wednesday as risk sentiment faltered across markets in the lead-up to the latest monetary policy decision from the Federal Reserve.

The price of Bitcoin has fallen 0.3% over the past 24 hours to $19,177. ​​The largest crypto remains firmly outside the $20,000 to $25,000 range in which it largely has traded since mid-June, plunging below $18,500 in the depths of a rout earlier in the week to near its yearly low. Bitcoin is at less than one-third its all-time high of almost $69,000, reached at the peak of the crypto market in November 2021.

“Bitcoin’s fate will be determined by this week’s central bank decision fireworks, which could help fuel any selloffs to retest the summer lows,” said Edward Moya, an analyst at broker Oanda. “Peak pessimism is almost here for crypto, which is needed before longer-term money piles back in.”

Looming large is a decision from the Federal Reserve on interest rates due at 2 p.m. Eastern on Wednesday. Facing the highest inflation in decades, the Fed has aggressively tightened financial conditions this year, knocking stocks and raising the prospect of recession. Cryptos have shown to be largely correlated to stocks amid these macro pressures, tumbling in tandem with the

Dow Jones Industrial Average
and

S&P 500
as more hawkish monetary policy has dampened demand for risk-sensitive assets. 

The Fed is expected to raise rates by 75 basis points, or three-quarters of a percentage point, for the third time since June—the biggest hikes since 1994. However, markets have not priced out the possibility of a bigger increase of 100 basis points, and Fed Chairman Jerome Powell could also slam risk sentiment with hawkish messaging round future hikes. That leaves risk to the downside going into the Fed decision, and analysts are eyeing where Bitcoin could find support in the case of a further slide.

“$17,500 remains a very important support area. Below this level, Bitcoin has support at $15,500 and strong support at $12,000,” said Vetle Lunde, an analyst at crypto investment firm Arcane. “A push towards $12,00 would be analogous to previous bear market cycles in Bitcoin, representing an 80% drawdown, as we saw during both the 2014 and 2018 bear markets.”

Katie Stockton, managing partner at technical research firm Fairlead Strategies, sees support for Bitcoin prices at much closer levels—around $18,300 to $19,500. But as Stockton outlined in a note earlier this week should prices close below $18,300 for two weeks in a row, it “would mark a breakdown in a bearish development” and put the next key support level at $13,900.

Beyond Bitcoin,

Ether
—the second-largest digital asset—shed 0.4% to $1,352. Smaller tokens or altcoins were more mixed, with

Solana
down 0.5% and

Cardano
1.7% higher. Memecoins exhibited more of the same, with

Dogecoin
up 1.1% and

Shiba Inu
slipping 2%.

Write to Jack Denton at jack.denton@dowjones.com