Bitcoin and other cryptocurrencies experienced a decline on Thursday as a broad selloff in risk-sensitive assets took hold. This comes after an initial surge in the crypto market following a credit rating downgrade of the U.S. by Fitch, which had a negative impact on overall market confidence.
The price of Bitcoin has dropped by more than 1% in the past 24 hours, now hovering just above $29,000. This move has pushed the largest cryptocurrency further away from the key range between $30,000 and $31,000, which has provided significant support for Bitcoin over the past few months.
While Bitcoin has managed to resist a significant selloff for now, analysts like Alex Kuptsikevich from broker FxPro believe it is only a matter of time before the downtrend accelerates.
Earlier this week, Bitcoin briefly surpassed $30,000 after the Fitch downgrade, driven by crypto enthusiasts who highlighted the diminishing confidence in the traditional financial system and the appeal of decentralized alternatives. However, it has since retraced its gains. The decline in digital assets corresponds with the downturn in the stock market, where the Dow Jones Industrial Average and S&P 500 experienced significant losses on Wednesday and were expected to continue declining on Thursday as Treasury yields rose.
Bitcoin is now approaching critical technical levels below its 50-day moving average, currently around $29,500, making it susceptible to further declines. According to Katie Stockton, managing partner at technical research firm Fairlead Strategies, the next support level for Bitcoin is at the rising 200-day moving average of $26,700, with long-term secondary support near $25,200.
In addition to Bitcoin, Ether—the second-largest cryptocurrency—also fell by 1.5%, trading at $1,830. Other smaller cryptocurrencies or altcoins showed weakness as well, with Cardano dropping by 4% and Polygon slipping by 2%. Memecoins like Dogecoin and Shiba Inu also experienced losses, with Dogecoin down 4% and Shiba Inu shedding 2%.
It remains to be seen how the crypto market will respond in the coming days as risk appetite wanes and investors look for alternative investment opportunities.
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