Cryptocurrencies mirrored global markets and declined after Jerome Powell warned against prematurely loosening policy.
With Bitcoin dipping below the bottom end of the narrow range that it has traded in the past two weeks. “Powell’s admission that there will be pain before there is relief is rather hawkish,” said Josh Olszewicz, head of research at digital asset fund manager Valkyrie Investments.
The largest cryptocurrency by market shed as much as 3.4% to $19,947.32 on Saturday as of 2:40 p.m. in Singapore, dipping below $20,000 for the first time since July 14 and extending its rout this year to 57%. It has traded in a range between that level and about $22,000 for the past week.
Ether slid as much as 5.5% to $1,471.41. Solana and Avalanche fared worse, dropping as much as 6.4% and 6.9%. Even so, some analysts say that the recent trading pattern presents a buying opportunity:
Onchain metrics “signal that the price is at the accumulation zone, which has been historically market bottom formations and value investing,” CryptoQuant said in a report Thursday.
“Friday’s break looks important and negative in the short run but should line up with buying opportunities into early September as cycles remain bullish and project higher prices into November 2022,” Mark Newton, technical strategist at Fundstrat, said in a note Friday.
Powell, the Federal Reserve chairman, signaled the US central bank is likely to keep raising interest rates and leave them elevated for a while to stamp out inflation, and he pushed back against any idea that the Fed would soon reverse course. Low rates are seen as one of the catalysts for pushing investor into crypto during the Covid lockdowns.
Ether had been outperforming the broader crypto market in recent weeks amid optimism over a pending network software upgrade called the Merge.