After experiencing volatility early Wednesday, Bitcoin’s price took a significant downturn during the U.S. afternoon session, falling below $66,000 and testing the lower limits of its recent trading range. After trading as high as $68,500 overnight, Bitcoin (BTC) recorded a decline of 2.5% over the past 24 hours, last seen trading at approximately $66,200.
This downturn in Bitcoin was reflected in the performance of related crypto stocks, which, after starting the day on a positive note, succumbed to declines. Notably, Coinbase (COIN) reversed a morning increase of 3% to end the day down by 2%. MicroStrategy Inc. (MSTR), the largest corporate holder of Bitcoin, also witnessed a decrease of about 3%, mirroring the weakness in its underlying asset.
Meanwhile, U.S. stocks, which initially appeared to be on an upward trajectory, reversed gains, aligning with the broader adverse sentiments in the market. This shift was exacerbated by the release of minutes from the January meeting of the Federal Open Market Committee (FOMC) of the Federal Reserve. While consensus was reached on pausing rate cuts, several members pointed towards a preference for “two-sided” guidance, indicating a potential for interest rate hikes if inflation remains persistent.
The U.S. dollar was able to capitalize on the day, strengthening further as the dollar index (DXY), which tracks the greenback against a range of foreign currencies, reached its highest level in nearly two weeks. A stronger dollar typically puts pressure on risk assets, and the decline in cryptocurrency prices was in line with this trend.
As Bitcoin trends downward, it finds itself on the brink of experiencing a fifth consecutive week of losses, marking its worst streak since the prolonged bear market of 2022. Currently, Bitcoin faces critical support levels around the $66,000 mark, which held firm last week and facilitated a rebound above $70,000. Should this support fail, traders might begin to eye the early February lows around $60,000, anticipating a potential further decline.
