Bitcoin experienced a notable decline of over 3% on Tuesday, reaching a price of $63,494, marking its lowest point since July 17. This downturn coincided with a significant selloff in AI-linked tech stocks, particularly impacting South Korea’s KOSPI index, which plummeted by more than 10% as investors reacted to fears surrounding AI chipmakers like Samsung Electronics and SK Hynix.
The ripple effects of this selloff extended into the cryptocurrency market, with leading altcoins also feeling the strain. Ethereum fell approximately 4.43%, Solana dropped 4.41%, and XRP saw a decline of 4.89% during the same period.
Fed Meeting Looms
All eyes are now on the Federal Reserve, as its two-day meeting concludes on Wednesday. Traders are currently pricing in a 38% likelihood of an unexpected rate hike this week, with the chances of a September increase climbing above 80%, according to recent data. Such developments generally raise concerns for non-yielding assets like Bitcoin, which may struggle to attract investment in a higher interest rate environment.
Despite the recent price struggles, Bitcoin managed to hold its ground with respect to critical moving averages. On Sunday, it successfully maintained its 21-day and 50-day simple moving averages, positioned at $64,289 and $63,261 respectively. Analyst Michaël Van de Poppe indicated that holding these levels could signal a bullish trend, although he cautioned that the market remains somewhat fragile. He suggested that a push towards $66,000-$67,000 in the coming days would strengthen the bullish case further.
Whale Accumulation Amidst Retail Retreat
Interestingly, while retail interest appears to be cooling, on-chain data from Santiment reveals that wallets holding between 10 and 10,000 BTC have added a staggering 19,696 BTC over just eight days. This accumulation by larger stakeholders indicates a confidence in Bitcoin’s long-term potential, contrasting sharply with the reduced buying activity from smaller, retail accounts, which have shown less enthusiasm for dip-buying.
Analysts also noted that Bitcoin’s 3-day Bollinger Bands are beginning to tighten, a phenomenon that often precedes significant price movements. As low volatility typically precedes a major price expansion, traders are keenly observing these indicators for potential shifts.
Earlier on Monday, Bitcoin had seen a brief rally towards $66,000 following news of a pause in military actions between the US and Iran, which initially sparked optimism in the market. However, by Tuesday, this relief rally had faded, and Bitcoin closed at $63,494 as of 01:42 ET on July 28.
Despite the challenges posed by the current macroeconomic landscape, QCP Capital highlighted that Bitcoin and Ethereum are still up approximately 11.6% and 24.6% respectively for the month, underscoring the resilience of these assets amid ongoing market turbulence.
