- Bitcoin fell to a two-week low of $62,000, dropping 4% in sympathy with a broader sell-off in tech stocks.
- Market sentiment appears to be shifting as investors digest expectations of interest rate hikes by the Federal Reserve.
- Analysts from Hashdex and GSR suggest geopolitical de-escalation and the potential passage of the Clarity Act could serve as market catalysts later this year.
Crypto markets tumbled in sync with U.S. tech stocks on Tuesday, erasing recent gains as investor risk appetite waned. Bitcoin led the decline, testing a two-week low near $62,000, according to CoinGecko data, while Ethereum, XRP, and Solana posted even steeper losses.
The tech-heavy Nasdaq was on track to slide significantly, pressured by a sell-off in AI-related chipmakers. “Crypto is reacting to that risk-off sentiment,” said Carlos Guzman of GSR, noting the shift followed a frenetic rally.
Investors are now fixated on a firmer consensus around impending rate hikes. This follows remarks from new Federal Reserve Chair Kevin Warsh, who signaled a shift away from forward guidance while emphasizing inflation control.
Traders are expecting a rate increase in July, which typically weighs on risk assets like crypto. “If people think that we’re going into a hawkish environment, that can certainly hurt near-term prices,” said Gerry O’Shea of Hashdex.
Despite the pressure, on-chain data from Glassnode showed an uptick in bullish Bitcoin bets on one major derivatives platform. Meanwhile, Bank of America economists projected three rate hikes this year.
O’Shea pointed to two potential positive catalysts: further de-escalation in the Middle East and passage of the Clarity Act. However, time is running out for the sweeping crypto legislation before midterm elections consume lawmakers’ focus.
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