Bitcoin (CRYPTO: BTC) and other major coins dropped sharply lower Wednesday evening as the global cryptocurrency market cap decreased 5.35% to $2.1 trillion.
What Happened: The apex cryptocurrency fell 5.4% to $43,702.87 over 24 hours. BTC has fallen 6.3% over a seven-day trailing period.
Ethereum (CRYPTO: ETH) dropped 6.8% to $3,547.28 over 24 hours. For the week, it is down 2.9%.
Dogecoin (CRYPTO: DOGE) fell 5.7% to $0.16 over 24 hours. Over a seven-day trailing period, it traded lower by 9.5%.
DOGE-rival Shiba Inu (SHIB) lost 6.7% of its value over 24 hours to $0.00003. Over the last week, it has plunged 9.55%.
The top gainer over 24 hours at press time was Chainlink (LINK). It rose 4.8% in the period to $25.31 and 27.9% over the last seven days, according to CoinMarketCap data.
Other notable gainers over 24 hours were Mina (MINA), Livepeer (LPT), and XDC Network (XDC).
MINA was up 4.7% to $3.93, LPT rose 4% to $44.89, while XDC gained 2.2% to $0.094 in the period.
See Also: How To Buy Bitcoin (BTC)
Why It Matters: Released minutes from December’s Federal Open Market Committee meeting indicate that forces fueling high inflation would last beyond 2022, which implies interest rate hikes could come sooner than expected.
Futures on federal funds rate have priced in a nearly 80% chance of a quarter-percentage-point hike in interest rates by the U.S. central bank at its March policy meeting after the release of the minutes from the December Fed huddle, reported Reuters.
An interest rate hike spells trouble for high-risk assets like cryptocurrencies, which declined on Wednesday alongside traditional assets like stocks.
Bitcoin touched an intraday low of $42,466.69 over 24 hours, as per CoinGecko data. The S&P500 index closed 1.9% lower at 4,700.58, while NASDAQ ended Wednesday 3.3% lower at 15,100.17.
“Bitcoin is in desperate need of a catalyst as crypto traders struggle to buy ahead of the beginning of a Fed rate hiking cycle,” wrote OANDA Senior Market Analyst Edward Moya, in an emailed note.
Moya had placed $45,500 as a “key level” for the apex cryptocurrency after which, according to the analyst, it “could be a freefall to $40,000.”
The historical movement of Bitcoin points to weeks of pain to come for bulls, according to Marcus Sotiriou, an analyst at United Kingdom-based digital asset broker GlobalBlock.
Using a chart from cryptocurrency trader Rekt Capital, Sotiriou noted that in May-July 2021 Bitcoin remained between the 21-week exponential moving average and the 50-week exponential moving average for over 10 weeks.
BTC/USD Price Movement 2021 — Courtesy GlobalBlock Via Rekt Capital
“Bitcoin is currently between the same moving averages, yet only 5 weeks have been spent in this region. This suggests that, if history is to repeat, there may be some more weeks of pain for bulls, but that this is a period of accumulation leading to new all-time-highs in the coming months,” wrote Sotiriou, in a note seen by Benzinga.
Meanwhile, the percentage of Bitcoin unspent transaction outputs (UTXO) in loss (7-day moving average) has touched a 5-month low of 85.6%, according to a tweet from Glassnode.
UTXO is a reference to the amount of coins left over after executing a transaction.
Previous 5-month low of 85.619% was observed on 05 January 2022
View metric:https://t.co/Z8rNEdUuke pic.twitter.com/bb4C0tL9JS
— glassnode alerts (@glassnodealerts) January 6, 2022
In the bull run of 2017, 95% of UTXOs saw a sustained period of profitability. This metric is useful in identifying short-term cycles.
Commenting on Bitcoin’s downwards price action on Twitter, cryptocurrency investor Lark Davis said “short term price of [Bitcoin] is largely irrelevant for me outside of buying dips. I am a long term holder. Up down, whatever.”
In a separate tweet, Davis said the 36% decline of Bitcoin from all-time highs was “nothing out of the ordinary.”
— Lark Davis (@TheCryptoLark) January 5, 2022
Read Next: Bitcoin-Related Legislations Aimed At ‘Full Re-Engineering Of The Economy,’ Says El Salvador President