Bitcoin Keeps Slipping. A Correction Makes Sense After This Year’s Rally.
Text size
Bitcoin has failed to recapture the key $30,000 level reached in April.
Dreamstime
Bitcoin
and other cryptocurrencies slipped Tuesday, moving further from the peak of this year’s rally as a correction from last month’s peak continued.
The price of Bitcoin has fallen 1% over the past 24 hours to $27,150, after briefly slipping below $27,000 in earlier trading. The largest crypto continues to languish below the psychologically and technically important $30,000 level, which Bitcoin breached in April for the first time since June 2022 but has since failed to consolidate near there, losing more ground over the past week. While Bitcoin remains up by some two-thirds this year, the rally may be losing steam and could be poised for a correction.
“Bitcoin appears to be consolidating around $27,000 in the short term but there remains downside risk after breaking this notable support level last week. It found support around $26,000 but may struggle to generate significant momentum higher,” said Craig Erlam, an analyst at broker Oanda.
Much of Bitcoin’s rally so far this year has come amid expectations that the Federal Reserve is ending its campaign of tightening financial conditions, and could even cut interest rates later this year. A dramatic rise in interest rates largely was behind the selloff across digital assets last year because cryptos, like tech stocks, have proven sensitive to higher rates, which dampen demand for higher-risk investments.
However, recent catalysts indicating lower inflation—which may allow the Fed to ease off aggressive monetary policy—have failed to move Bitcoin much, possibly indicating that bullish sentiment may be almost fully exhausted in the current environment. That comes despite the same economic indicators helping the tech-heavy
Nasdaq Composite
outperform the
Dow Jones Industrial Average
and
“It’s been a phenomenal run this year so a correction would make sense,” said Oanda’s Erlam. “If [Bitcoin] does break below $26,000 then $25,000 would be the next potential support level.”
Beyond Bitcoin,
Ether
—the second-largest crypto—lost less than 1% to $1,820. Smaller cryptos or altcoins exhibited more of the same, with
Cardano
and
Polygon
down 1% each. Memecoins were similarly in the red, with
Dogecoin
and
Shiba Inu
both shedding 1%.
Write to Jack Denton at jack.denton@barrons.com