Bitcoin and other cryptocurrencies were falling Wednesday, with token traders seeming fearful of how escalating violence in the Middle East could hit the most risk-sensitive assets—something the stock market seems to be looking past.
“This is the fifth consecutive day of decline after a failed attempt to consolidate above the 200-day moving average late last week,” said Alex Kuptsikevich, an analyst at broker FxPro. “A consolidation below $27,000 will likely intensify the selloff and open the way for a quick drop to $26,000 and further to $25,000.”
“I think a lot of investors are preparing themselves for a significant pullback for Bitcoin in light of the escalating geopolitical tensions globally,” said Phillip Shoemaker, blockchain investor and executive director of Identity.com, a crypto-focused identity verification group. “Many are concerned about a surge in oil prices as a result of what’s happening in the Middle East that, in turn, could have a knock-on effect on a lot of assets, especially those further along the risk curve.
A surge in the price of crude in recent months has renewed inflationary pressures that have worried investors because it could mean that the Federal Reserve may keep interest rates higher for longer than once thought. Higher rates tend to hurt risk-sensitive assets like stocks and cryptos. When returns are higher on risk-free cash or government debt it removes incentives for investors to pile into riskier bets like Bitcoin.
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