Bitcoin, Ethereum, Dogecoin Pulled Down By Equities' Slide As Focus Shifts To Fed's Hawkishness

Bitcoin, Ethereum and other major coins crashed on Wednesday evening, as the global cryptocurrency market cap lost more than 6.4% to $1.2 trillion at press time.

See Also: How To Get Free NFTs

Why It Matters: Cryptocurrencies dropped sharply in line with stocks, which crashed on inflation worries and worse-than-expected retail earnings Wednesday.

The Dow closed more than 1,100 points lower or 3.6% to 31,490.07 on Wednesday. The S&P 500 and the Nasdaq ended the day 4% and 4.7% lower respectively. 

The yield on the benchmark 10-year bond slid below the 3% mark on weak U.S. housing starts number, a harbinger of weakening growth.

GlobalBlock analyst Marcus Sotiriou said it is unclear what the rate hikes will look like after July. “The market believes there is a 4.5% chance of no more 50 basis point hikes after July and a 36% chance of 1 more 50 basis point hike after July,” said Sotiriou in a note.

Sotiriou said he believes that inflation will begin to inflect down in August, September and October.

There are doubts whether the U.S. Federal Reserve would be able to deliver a “soft landing” as it fights inflation, said Edward Moya, a senior market analyst at OANDA.

“Bitcoin was dragged down alongside most risky assets as Wall Street suffered the worst loss in almost two years. ​ Bitcoin remains a risky asset and vulnerable to further pain if the de-risking continues tomorrow,” said Moya, in an emailed note seen by Benzinga.

Cryptocurrency markets face systemic issues with stablecoins beyond the macro fundamentals. Glassnode tweeted that aggregate stablecoin supplies have dropped by a total of $8.4 billion over the last month, the largest such downfall in history. 

“This reflects a net capital outflow from the space,” said the on-chain analysis firm.

Aggregate stablecoin supplies have declined by a total of $8.4B over the last month, the largest in history.

This reflects a net capital outflow from the space.

Last week, $USDC expanded by $2.64B, whilst $DAI contracted by over 24%, as debt positions were closed or liquidated. pic.twitter.com/xMrUy4gxkU

— glassnode (@glassnode) May 18, 2022

Cryptocurrency trader Michaël van de Poppe said the question remains if Bitcoin can hold the $29,300 level, but said he is expecting a high-low on the apex coin’s chart and the asset heading towards the $32,800-$34,000 level. 

Probably some momentum towards $29.7K possible.

Question whether we can hold $29.3K for continuation, but overall I'm still expecting a HL to be happening on #Bitcoin in which we continue towards $32.8K/$34K.

— Michaël van de Poppe (@CryptoMichNL) May 18, 2022

Chartist Ali Martinez said 2.24 million addresses purchased 26.33 million ETH at $2,300 and weakness in the asset might prompt these to sell, which could see the second-largest coin drop to the “most important support” at $700 where 13.25 million addresses hold 13.1 million coins.

Transaction history shows that 2.24 million addresses bought 26.33 million $ETH at $2,300.

Any signs of weakness might encourage these addresses to sell, which could see #Ethereum drop to its most important support at $700 where 13.25 million addresses hold 13.1 million #ETH. pic.twitter.com/5SE67MhHwh

— Ali Martinez (@ali_charts) May 18, 2022

Read Next: Analyst Says Sam Bankman-Fried's Robinhood Stake Signals 'Strong Support'