When the United States shares opened on Tuesday, the encrypted assets followed the technology unit weak. Bitcoin went down to $62,000, two weeks low. The market has generally linked this turnback to the risk preference for cooling, especially after the AI concept unit rebounded, when the financial approach to high-volatile assets became evident.
Bitcoin went down to $62,000.
According to CoinGecko, bitcoin has fallen by about 4% over the past 24 hours. The decline was even greater, at over 5%. This means that the push is not limited to a single currency, but spreads to major encrypted assets.
Wall Street is also under pressure. The projected decline of 1.6 per cent in the NASDAQ indexboard, dominated by the Science and Technology Unit, is a major drag. The South Korean and Japanese stock markets have also gone down a little earlier, with a general fallback in a number of previously technologically-driven shares.
Increased interest rate expected to suppress risk preferences
Encryption trading agency GSR research director Carlos Guzman stated that the market was going through a round of sales synchronized with AI-related stocks, and the encryption asset was responding directly to this risk avoidance.
In his view, investors were currently more concerned with changes in the interest rate path. The science and technology unit had previously remained resilient during periods of tension in the Middle East, but this support was weakening as the market expected to warm up further interest rates.
The report mentions that the new Fed president, Kevin Warsh, made his first public statement last week, stressing that central banks will focus on curbing inflation and reducing forward-looking guidance to markets. As a result of this, traders now expect the Fed to increase the base rate to 3.75 to 4 per cent in July.
In a Monday report, American bank economists forecast a further three interest rates hikes this year, ranging from 4.25 to 4.5 per cent at the end of the year. In this environment, the attractiveness of low-risk assets, such as government bonds, tends to suppress the performance of risk assets, such as encrypted currency and technology units.
The market is still waiting for a new catalyst.
Hashdex Global Market Insight Manager Gerry O'Shea argued that if the market recognizes a policy environment that is more hawk-oriented, the short-term price of encrypted assets will remain under pressure. He predicted that bitcoin would continue to fluctuate between $60,000 and $70,000.
However, the chain derivatives market is not completely empty. On Tuesday, Glassnode indicated that the bitcoin silo on Hyperliquid was becoming more optimistic, indicating that some traders were still watching a higher bet.
O'Shea also mentioned that if the situation in the Middle East continued to ease and the United States Congress advanced the Clarity Act, it could be a factor in boosting market sentiment in the second half of the year. The bill is intended to further clarify the division of responsibility for the regulation of the encryption industry, but if progress is not made by August, the legislative window may narrow down as the mid-November elections approach.