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Cryptocurrency prices fall as investors derisk following hawkish Fed comments

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(Kitco News) - Cryptocurrency prices traded lower on Thursday as the extra time to digest Wednesday’s comments from Fed Chair Jerome Powell about interest rates staying “higher for longer” resulted in investors adopting a risk-off approach.

Concerns over how long interest rates will stay elevated also took a toll on stocks, which fell under pressure at the market open and remained under water throughout the trading session. At the closing bell, the S&P, Dow, and Nasdaq all finished in the red, down 1.64%, 1.08%, and 1.82%, respectively.

Data provided by TradingView shows that Bitcoin’s (BTC) price stair-stepped lower in trading on Thursday, hitting a low of $26,360 in the afternoon before bulls managed to push it back above support at $26,550.

BTC/USD Chart by TradingView

The weakening outlook for Bitcoin first appeared in the futures market, as “September Bitcoin futures prices [were] weaker in early U.S. trading Thursday,” according to Kitco senior technical analyst Jim Wyckoff.

Bitcoin futures 1-day chart. Source: Kitco

“Bulls are fading a bit late this week and need to step up and show fresh power soon, in order to keep alive a fledgling uptrend on the daily bar chart,” Wyckoff said.

Reinforcements for the bulls may soon come according to Markus Thielen, head of research at Matrixport, as Bitcoin has historically shown strong performance in the month of October.

“Q4 traditionally represents Bitcoin’s strongest quarter, with an average of +35% return over the past nine years,” Thielen said. “If history is any guide, Bitcoin could reach $37,000 by year-end. October particularly stands out, with positive returns in seven of the last nine years (78% hit ratio) averaging returns of +20.3%.”

Bitcoin average monthly returns. Source: Matrixport

Thielen said the ‘Matrix on Target’ backtest model recently gave a new breakout signal for Bitcoin.

“In the last 10 instances when this model was triggered, prices rallied by an average of +9% in a relatively short period, with only one trade resulting in a loss (-1.8%),” he said. “Additionally, Bitcoin is crossing the 50-day moving average – a simple trend model that signals when Bitcoin is experiencing a bullish trend (above) or a bearish trend (below).”

He also noted that in October, “the second deadline for the Bitcoin ETF filings will require the SEC to announce or postpone their decisions until January, regarding the request to approve the Bitcoin ETFs,” which could impact price.

While Thielen sees historical evidence for a strong BTC performance in October, market analyst Doctor Profit is predicting weakness in the near term and plans to add to his short position if Bitcoin manages to climb into the range between $28,300 and $28,600.

In response to a question about the target range for Bitcoin to the downside, Doctor Profit said he has “adjusted the target [to] between $20-23k.”

Altcoins follow Bitcoin’s lead lower

The majority of altcoins in the top 200 traded in the red following Bitcoin’s price pullback as the move by traders to derisk took a toll on the broader crypto market.

Daily cryptocurrency market performance. Source: Coin360

IMX (IMX) benefited from a surge in trading on South Korean crypto exchanges that resulted in its price increasing 23.11%, while news that Alchemy Pay received a money transmitter license in the state of Arkansas helped boost the price of ACH 7.7%. Storj (STORJ) led the losers with a decline of 7.9%, followed by a loss of 6.4% for Synthetix (SNX).

The overall cryptocurrency market cap now stands at $1.05 trillion, and Bitcoin’s dominance rate is 49.2%.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.