Bitcoin’s price has stabilized at the $26,000 mark, but growing dollar strength and an upcoming Federal Reserve announcement are causing apprehension among investors.
While Bitcoin remains relatively stable, altcoins have faced downward pressure, further adding to the market’s uncertainty.
As of 7:30 a.m. ET, Bitcoin has traded flat around the $26,000 level, with a modest 0.4% increase over the past 24 hours, according to CoinGecko’s data.
This tentative stability comes amidst a broader environment of volatility in the cryptocurrency market.
Altcoins have contributed to the market’s overall decline on this particular day. The BNB token, for example, experienced a slide to $209 at 7:30 a.m. ET, representing a drop of more than 12% over the past week.
Similarly, XRP suffered a 17.5% decline over the past week, now priced at $0.51, and Cardano was down by over 2.6% in the preceding 24 hours, trading at $0.25.
Investors currently have two key factors influencing their appetite for risk assets, including cryptocurrencies. Firstly, the allure of higher U.S. 10-year Treasury yields, reaching levels not seen since 2007, is diverting attention from riskier assets.
Secondly, anticipation of a potentially hawkish statement from Federal Reserve Chair Jerome Powell during the Jackson Hole Symposium on Friday is causing market unease.
Analysts have noted that in anticipation of Powell’s speech, some investors might be transitioning from riskier assets towards safer options like bonds.
The current inflationary landscape has heightened expectations for a moderately hawkish tone at Jackson Hole, signaling the Fed’s commitment to addressing economic concerns.
Despite the anticipation of a more hawkish approach from the Fed, experts like Ravi Doshi, global head of trading at Genesis, suggest that Powell might use the announcement to signal a desire to maintain higher rates for an extended period.
While the market is expecting rate cuts in 2024, there remains uncertainty about the Fed’s course of action.
There is the looming potential for a surge in dollar strength post-Jackson Hole. A stronger U.S. dollar index (DXY) could create headwinds for risk assets, including cryptocurrencies.
If the dollar becomes more attractive as a safe haven, Bitcoin’s risk-adjusted returns could be perceived as less appealing in comparison.