Bitcoin lingers around $ 46,000 with diminishing risk sentiment


(Bloomberg) – Bitcoin has extended its five-week decline from an all-time high as risk sentiment in global financial markets eases.

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The largest cryptocurrency by market value was little changed after falling 2.5% to $ 45,583 on Monday in New York City. It has fallen about 32% since reaching a record low in early November. Ethereum fell 4.3%, while popular DeFi tokens such as Solana, Cardano, Polkadot and Polygon also slipped.

“The macro talking points around Bitcoin as a store value, as an inflation hedge, have definitely gained a ton of traction,” said Chris Matta, president of 3iQ Digital Assets. “And so what that means now in a risk-free environment is that you are starting to see Bitcoin becoming perhaps a little more correlated with traditional assets.”

Central banks around the world are prioritizing tackling high inflation by tightening monetary parameters, while keeping a cautious eye on the impact of the omicron. This backdrop makes investors wonder if so-called risky assets like cryptocurrencies and tech stocks are due to a tougher time after going through pandemic lows.

Bitcoin is also facing price levels that technical analysis is watching for signs of future direction. The digital currency stands at its 55-week simple moving average. The token has generally bounced higher in the past several times when it has reached the level.

Katie Stockton, founder of Fairlead Strategies, is considering a support level of $ 44,200 for the cryptocurrency. If that level is broken, “significant long-term support at the weekly cloud lower bound will likely be tested, near $ 37,000,” she said.

Bitcoin has fallen for five consecutive weeks, as measured by the seven days ended Friday. Unlike most traditional asset classes and securities, digital tokens trade around the clock, often on lightly regulated online exchanges around the world.

The risk of an “imminent reduction in liquidity” as the Federal Reserve cuts its asset purchase program will weigh on risky assets, especially those that do not generate cash flow, including Bitcoin, according to Jay Hatfield , Managing Director and Founder of Infrastructure Capital Management.

“When there is a lack of liquidity, the riskiest assets are the most affected,” he said.

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