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Bitcoin Price Drops Below $21,000 as Uncertainty Surrounds Fed Rate Increase

  • The price of Bitcoin fell over 9 percent and dropped below $21,000, marking a new low for the cryptocurrency.
  • This drop in Bitcoin’s price is its biggest one-day decline since June.
  • During European trading, U.S. stock futures also fell.
  • As of now, Bitcoin is trading at $21,217, according to CoinMarketCap data.
  • About $220 million worth of cryptocurrency positions were liquidated within an hour on Friday, with Bitcoin accounting for roughly half of that amount.
  • In the past 24 hours, nearly 170,000 positions were liquidated, totaling close to $600 million.
  • Analysts speculate that the sell-off was triggered by the close correlation between U.S. stocks and cryptocurrencies, as well as disagreements within the Federal Reserve regarding interest rate hikes.
  • Germany’s producer price index for industrial goods (PPI) rose to a record 37.2% in July, causing central banks to raise interest rates in order to curb inflation. This has put pressure on cryptocurrencies.
  • St. Louis Federal Reserve Bank President James Bullard supports a 3-yard rate hike at the upcoming Fed meeting in September, while Kansas Federal Reserve Bank President Esther George believes there are still reasons to continue raising rates.
  • Craig Erlam, a senior market analyst at Oanda, suggests that the reason for the Bitcoin sell-off is unclear, but believes it is justified considering the lack of recovery. He predicts the next support level is at $20,000.
  • The Bitcoin “Fear and Greed Index” is currently in the fear territory at 29.
  • According to cryptocurrency analyst Il Capo, main resistances for Bitcoin are at $22,500 and $23,500, while the main support is at $19,000.
  • The analyst predicts a possible drop to $16,000 in the coming weeks.
  • Despite a rebound from its low of $17,599 on June 18, Bitcoin is still down 54 percent for the year.

Image source: Shutterstock

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