Crypto Sell-off Forces Coinbase to Cut Jobs, Fed Rate Decision Looms
Bitcoin, Ethereum, Coinbase Talking Points
- Bitcoin price stabilizes above $20,000, Ethereum finds support above $1,000
- USD remains firm as risk sentiment & the beginning of the two-day FOMC meeting supports the safe-haven currency
- Coinbase under scrutiny as the major exchange plans to reduce its workforce by 18%. Can major exchanges survive another slide?
Persistently high inflation remains at the forefront of risk sentiment proving that the days of Bitcoin being perceived as a hedge against inflation are long gone. In response to Friday’s US CPI report, a higher probability for the Fed to hike rates by 75bps tomorrow resulted in a broad sell-off in risk assets, dragging the crypto market cap with it.
With the FOMC meeting currently underway, the crypto massacre has taken a slight breather, allowing Bitcoin to find support above the key $20,000 handle. Although fundamentals have been priced in (to a certain extent), the Fed interest rate decision and the accompanying Press Conference may still provide an additional catalyst for price action if further monetary tightening measures are announced.
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As digital assets remain vulnerable to wanning sentiment, Coinbase CEO Brian Armstrong announced that the largest US crypto exchange would be reducing their workforce by 18%, bringing the health of the industry into question.
With Bitcoin currently trading at December 2020 levels, key technicals may provide additional layers of support and resistance for the imminent move.
For now, the key $20,000 psychological level holds as critical support with a break below opening the door for two major Fibonacci levels residing at $18,397 and $17,569 respectively. Meanwhile, the MACD (Moving Average Convergence/Divergence) continues to trade below the zero line,suggestive that bears remain as the prominent drivers of price action, at least for now.
Bitcoin (BTC/USD) Daily Chart
Source: TradingView, Chart by Tammy Da Costa
--- Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.