Bitcoin Price has plunged below $59,000 in the early hour of Wednesday, as the risk viewpoint in traditional markets increases, due to Australia’s core consumer price index reaching a six-year high in September.
The data strengthened fears that advanced-nation central banks may raise interest rates faster to contain inflation.
While bitcoin is widely perceived as a store of value asset, it tends to attract hedging bids mainly during “risk-on” episodes in traditional markets.
READ: Bitcoin Price Heads To Moon As Bitcoin Hits $60, 120 ATH
The yield on the two-year U.S. Treasury bond, which is more sensitive to rate hike/inflation expectations than the 10-year, rose above 2% early today, the highest since the coronavirus-induced crash of March 2020. The spike is perhaps indicative of bond traders anticipating aggressive rate hikes by the Federal Reserve.
READ: Someone Moves 2, 210 BTC, Worth $125m Bitcoin On Blockchain
Money markets are pricing in a rate hike by the Bank of England at its Nov. 4 meeting.
According to analysts at FXStreet, the Bank of Canada is expected to continue tapering its liquidity-boosting asset purchases when it concludes its meeting later Wednesday. The bank may reiterate that the first-rate hike could happen in the second half of 2022. Traders will scan the statement for more hints of more aggressive tightening.
With optimism from the recent launch of bitcoin futures exchange-traded funds waning, bitcoin looks vulnerable to potential risk aversion due to rate hike fears. The S&P 500 formed a “Doji” candle with a long upper wick on Tuesday, signalling indecision at record highs and scope for a pullback.
According to Coindesk crypto analyst Omkar Godbole:
Bitcoin’s Head & Shoulders (H&S) Breakdown
Bitcoin’s hourly chart shows a head-and-shoulders breakdown (H&S), a bearish reversal pattern. Support is seen near $54,000.
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