Major cryptocurrencies were seen trading lower on Tuesday evening as the global cryptocurrency market cap dropped 0.2% to $805.9 billion at 7:14 p.m. EST.
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Why It Matters: Bitcoin and Ethereum were in the red just as stock futures inched lower on Tuesday evening.
Risky assets didn’t get off to the best start in 2023 with S&P 500 and Nasdaq ending Tuesday lower by 0.4% and 0.8% respectively.
Later this week, investors will look out for the Federal Reserve’s release of minutes from its latest policy meeting. Also due are the job openings and labor turnover survey numbers and ISM manufacturing data.
Bitcoin marked its “birthday” on Tuesday as 14 years have elapsed since the first block of the cryptocurrency was mined by its pseudonymous creator Satoshi Nakamoto.
Cryptocurrencies, including Bitcoin, are still not out of the woods, according to Edward Moya, a senior market analyst with OANDA.
“This is still a difficult time for crypto as everyone waits to see which will be the next crypto company to fail. Regulation is taking its time but guidelines should start to take hold this year. A top U.S. regulator delivered a joint warning on crypto activities, which did not contain any new risks,” said Moya, in a note seen by Benzinga.
“Bitcoin appears anchored but it is still not clear when we will test and possibly make a new bottom.”
The joint statement, referred to by Moya, was issued by the Federal Reserve, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency.
The statement said, “It is important that risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system.” It further stated, “The agencies will continue to closely monitor crypto-asset-related exposures of banking
Michaël van de Poppe tweeted that Ethereum needs to bounce from the current levels or “otherwise things get painful.”
The analyst said in a separate tweet that “crucial levels are approaching” for the second-largest cryptocurrency.
“if those are lost, [the] structure is lost and $1,165 and lower is on the cards,” said Van De Poppe.
Santiment noted that traders were “aggressively shorting” altcoins on Tuesday and some assets could be primed for short liquidations.
Some of the candidates the market intelligence platform identified for “small breakouts” included Solana (SOL), DigiByte (DGB), Kava (KAVA), and ZCash (ZEC).