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Bitcoin Suffers Largest Daily Plunge Since November to Sink Below $22.6K as Fed Meeting Looms
The largest cryptocurrency by market capitalization was recently down over 4.5% amid ongoing worries about inflation and the size of the next interest rate hike.
By Jocelyn Yang
Updated Jan 31, 2023, 7:17 p.m. Published Jan 30, 2023, 11:13 p.m.
Bitcoin dipped below $22,600 at one point Monday to record its biggest single-day percentage loss since early November when the FTX meltdown sent the crypto market reeling.
The largest cryptocurrency by market capitalization was recently trading at about $22,720, down more than 4.5% after climbing over $23,900 on Sunday for the first time since mid-August. Ether (ETH) dropped 5% to trade around $1,550 Monday. The CoinDesk Market Index was down 4.8% for the day.
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The last time BTC lost such an amount in a day was Nov. 9 when BTC plunged 14%, according to data from TradingView.
Some $44 million worth of BTC long positions were liquidated in the past 24 hours, part of a broader crypto market's Monday decline, according to Coinglass data.
Crypto-exposed stocks also sank, reflecting investors’ nervousness about the crypto market.
Exchange giant Coinbase (COIN) closed down over 8%, while bitcoin miner Marathon Digital Holdings (MARA) sank around 10%.
“Bitcoin is declining as Wall Street becomes very defensive ahead of this week’s major risk events,” Edward Moya, senior market analyst at foreign exchange Oanda, wrote in a Monday note.
Traders are expecting the U.S. Federal Reserve to raise interest rates by 25 basis points (bps) at its Federal Open Market Committee (FOMC) meeting, which begins Tuesday, although some analysts believe that a 50 (bps) hike remains a possibility amid ongoing worries about inflation.
Bitcoin’s recent resistance below $24,000 underscores this concern, and Moya noted that “for crypto to have any underlying support given all the regulatory and contagion fears, inflation risks need to go away.”
He added: “Bitcoin has massive resistance at the $24,000 level, so if risk aversion remains in place, downward momentum might not find major support until the $21,000 region.”
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