Crypto market trades flat as government shutdown looms, inflation fears rise
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(Kitco News) - The broader crypto market traded flat on Wednesday as investors remain unsure of how to properly position themselves ahead of a potential U.S. government shutdown that looks increasingly likely as the weekend deadline for a budget deal approaches without any meaningful progress.
Stocks fell under pressure at the open but managed to claw back the losses in the afternoon as traders who judged the past two days’ declines as overdone jumped back into the market. The 10-year Treasury yield briefly pulled back in the morning, only to surge to a new 16-year high of 4.643% in the afternoon, which renewed pressure on equities.
West Texas crude oil also climbed to a yearly high of 93.248, while Brent topped out above 97, further stoking concerns about inflation and raising the prospect of additional interest rates by the Federal Reserve. At the market close, the S&P finished flat, the Nasdaq finished up 0.22%, and the Dow finished down 0.20%.
Data provided by TradingView shows that Bitcoin (BTC) briefly spiked above $26,800 in the early hours on Wednesday, but reversed course soon after and fell back to support near $26,200, leaving its price relatively unchanged for the day.
BTC/USD Chart by TradingView
The early morning rally pushed October Bitcoin futures prices higher, according to Kitco senior technical analyst Jim Wyckoff.
Bitcoin futures 1-day chart. Source: Kitco
“While bears still have the overall near-term technical advantage, the bulls have stabilized the market at mid-week,” Wyckoff said. “More price gains this week would give the bears fresh technical momentum to suggest a near-term price bottom is in place.”
MN Trading analyst Daan Foppen said the recent break-out attempts by Bitcoin “did not really have any conviction behind” them, while “volume remains low and a lot of the major altcoins are printing new lows.”
He said the fact that altcoins are making new lows is concerning as the “funding game is something that you do not really want to see in the market. There is no new money coming in and everything looks like it is bleeding to death.”
Diving into the weekly chart for Bitcoin, Foppen said, “When we look at the really high timeframe, I would still say that we are going down.”
BTC/USD 1-week chart. Source: MN Trading
“The main reason for that is due to the story of internal range liquidity towards external range liquidity,” he said. “We have tested the internal range liquidity multiple times now. We still have an external range left open in the form of a set of equal lows. Equal lows are an easy draw on liquidity for price, so when we are purely looking at the weekly timeframe for Bitcoin, it is likely to say that we are going to see a move lower in the first place.”
Looking at the daily chart, Foppen said, “We can see a nice level which is in confluence with the Daily Fair Value Gap.”
BTC/USD 1-day chart. Source: MN Trading
“The Daily Fair Value Gap is a level which could act as resistance,” he said. “Besides that, it is again a form of internal liquidity and as you should know by now, it is likely to seek external liquidity next.”
And zooming in on the four-hour chart, Foppen noted that a bearish bias is supported by the fact that “Bitcoin dropped back into the volume range and it is trading in between value area high and low.”
BTC/USD 4-hour chart. Source: MN Trading
“We had a failed auction above the range high and we had a drop back into the range,” he said. “When we strictly look at the principals of value it is likely to see a move towards the value area low.”
Flat price action for altcoins
The price action for the majority of the top 200 tokens was flat as only 22 coins recorded gains or losses in excess of 3%.
Daily cryptocurrency market performance. Source: Coin360
Tellor (TRB) led the winners with a gain of 23.9% to trade at $54, followed by a 19.6% increase for Terra (LUNA), and a 15% gain for Merit Circle (MC). Mobilecoin was the biggest loser with a decline of 5%, while Immutable (IMX) and Astar (ASTR) fell 3.65%.
The overall cryptocurrency market cap now stands at $1.05 trillion, and Bitcoin’s dominance rate is 48.9%.