Bitcoin, Ethereum, Dogecoin Rallies Halt: Are Inflation And War Concerns Reasserting Their Dominance?

Bitcoin, Ethereum and Dogecoin traded flat on Wednesday evening as the global cryptocurrency market cap fell 0.5% to $2.15 trillion.

See Also: How To Buy Bitcoin (BTC)

Why It Matters: There has been a dent in market sentiment. Alternative.me’s “Fear & Greed Index,” which flashed “Greed” yesterday indicated “Neutral” at press time.

The rally in major cryptocurrencies remained muted on Wednesday, while other risk assets such as equities ended the day in the red. The S&P 500 and NASDAQ ended their sessions 0.6% and 1.2% lower, respectively.

Soaring inflation in Europe cast its shadow on markets as the war in Ukraine pushes up energy prices and impacts investor confidence. 

“We will face, in the short term, higher inflation and slower growth,” said European Central Bank President Christine Lagarde on Wednesday, according to a Reuters report. 

“The longer the war lasts, the higher the economic costs will be and the greater the likelihood we end up in more adverse scenarios," said Lagarde.

On Wednesday, Germany’s Federal Statistical Office said consumer price inflation in March was at 7.3% — the highest level since 1981. It was at 7.6% as per a harmonized measure used across the European Union. Annual inflation in Spain touched 9.8% in March, according to a report from the Financial Times.

War concerns will dominate the short-term fate of most risky assets, according to OANDA Senior Market Analyst Edward Moya.

“Bitcoin needs a catalyst to make a run towards the $50,000 level, so for now it seems like it could consolidate between the $45,000 and $48,000 levels,” wrote Moya in a note, seen by Benzinga.  

Even so, Bitcoin’s gains since Russia invaded Ukraine have been impressive and have overshadowed those of gold, according to cryptocurrency investor Quinten François.

Cryptocurrency trader Justin Bennett tweeted that $48,000 is a resistance level for Bitcoin, while $44,500-$45,000 is a support level. 

Large holders of Bitcoin, or the so-called whales, were active Wednesday. Market intelligence platform Santiment tweeted that there were 3,266 transactions of over $100,000+ between 2 p.m. and 6 p.m. UTC, the most in a 4-hour interval since March 1.

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