Bitcoin Flash Crash: BTC Price Slips Under $22,000 Amid Fed Concerns
The world’s largest cryptocurrency Bitcoin (BTC) has undergone a false crash with its price tanking more than 8% in the last 24 hours. As of press time, Bitcoin (BTC) is trading at $21,461 levels with a market cap of $411 billion.
With the recent move, Bitcoin has breached way under its 200-week moving average (WMA) of $23,000 which was a crucial long-term closes. If Bitcoin closes under this, it could mean the end of the bullish momentum with bears taking control once again.
Since touching $25,000 last week, the BTC price has corrected more than 15% now. The sharp price correction today comes as macro fears grip the crypto market once again. The U.S. Federal Reserve is most likely to announce another 75 basis points interest rate hike next month in September.
Although the U.S. inflation showed signs of cooling during the last month of July, it remains considerably high at 8.5%. This is still much higher than Fed’s targeted inflation of under 2%. Thus, Fed’s hawkish moves going ahead are very well expected by market experts. If this happens, U.S. equity market and crypto could react with a sharp downfall.
Since Wednesday’s release of the Fed meeting, U.S. equities have pulled back. Since there’s a strong correlation between the U.S. equity market and cryptocurrencies we are likely to see a similar reaction in the latter.
The recent correction in the Bitcoin price could suggest an end to the recovery trend. This is true not only for Bitcoin but also the broader cryptocurrency market. As part of the recent correction, the crypto market liquidations have skyrocketed to more than $400 million.
Apart from Bitcoin, the altcoin space is witnessing a more severe crash. The world’s second-largest cryptocurrency Etheruem (ETH) is down 9% at press time slipping all the way to $1,700 levels.
ETH rallied nearly 100% from its June bottom of $1,000 amid all the euphoria surrounding the Merge upgrade coming next month on September 15. This also led to a strong demand in the ETH options market as the open interest surged all the way to $8 billion. For the first time in history, the ETH options open interest surpassed the BTC options open interest.
All other top-performing altcoins like Polygon (MATIC), Cardano (ADA), Avalanche (AVAX), Polkadot (DOT), have suffered heavy corrections.