Bitcoin (BTC) saw continued consolidation below $28,000 on Monday, with the largest cryptocurrency trading at around $27,350, down 0.4% in the past 24 hours. According to Sam Callahan, an analyst at Swan Bitcoin, this drop can be seen as "a period of consolidation and a healthy correction after an explosive move upwards past $30,000 over the last several months."
Economic Metrics and Federal Reserve Influence Market
Callahan notes that market participants appear cautious due to the likelihood of the Federal Reserve maintaining higher interest rates for longer and economic metrics signaling economic weakness. Investors are anticipating next week's Federal Open Market Committee (FOMC) meeting, with a 91% probability of a 25 basis points interest rate hike, according to the CME FedWatch Tool.
Bitcoin's Value Proposition Remains Strong Amid Turmoil
Despite recent banking sector turmoil, Callahan believes that Bitcoin's value proposition as an asset without counterparty risk remains compelling and is reflected in its price. Ether (ETH), the second-largest cryptocurrency, was trading at around $1,833 on Monday, down 0.8% from Sunday.
BTC and ETH Sink as Investors Weigh Uncertainties
Over the past week, BTC and ETH have dropped 7% and 11%, respectively, as investors considered industry and macroeconomic uncertainties, including a decrease in U.S. dollar liquidity. The CoinDesk Market Index (CMI) was almost flat for the day and down 9.3% for the week.
BTC-to-Gold Ratio Continues to Climb Despite Price Drop
Crypto data firm Kaiko reported that the BTC-to-gold ratio continued to rise last week, indicating that BTC outperforms safe-haven gold despite ongoing macro uncertainty. Kaiko called this a bullish signal, noting that the ratio had fallen to its lowest level before rebounding this year.
Mixed Equities Trading and Falling Treasury Yields
Equities traded mixed on Monday afternoon, with the S&P 500 nearly flat, the Nasdaq Composite down 0.3%, and the Dow Jones Industrial Average up 0.1%. Yields on 2-year and 10-year Treasury notes fell to 4.14% and 3.51%, respectively.
Crypto Awaits Positive Regulatory Development
Edward Moya, the senior market analyst at Oanda, wrote that cryptos are currently "persona non grata for speculators" due to a weakening U.S. dollar and falling Treasury yields. Moya added that until a clear positive regulatory development emerges, bitcoin might remain in consolidation, searching for the lower boundaries of its trading range.