By Hamza Fareed Malik
In association with Luno.
Bitcoin’s (BTC) recent strong momentum stalled in the middle of last week, and the price has been drifting back towards the $20k mark after hitting highs above $24k last week. The leading cryptocurrency by market capitalisation has hovered around $21k since Monday, down almost 10 per cent over the past 7 days at time of writing. Can it pick up again soon?
Other major cryptocurrencies have also struggled, with Ethereum (ETH) paring last week’s price gains and dropping back below $1400. During the past seven days, we have seen price declines for almost all the top 50 cryptocurrencies by market cap. Most of these coins have seen between – 0 per cent and -10 per cent price movements during this period.
ETH’s lack of strength relative to Bitcoin has caused its market dominance to fall 0.34 per cent over the last week. On the other hand, Bitcoin has seen its market share increase by 0.47%. This is a natural rotation as markets fall, given that investors perceive bitcoin as a lower-risk asset than ether.
The big news last week was Tesla’s announcement that it sold the majority of its bBitcoin holdings during the second quarter to boost cash, with the electric car manufacturer struggling financially after its CEO Elon Musk’s failed Twitter bid. The company – specifically, the tweets of its dear leader Musk – was linked to a number of big price movements in cryptocurrency last year. Is that correlation returning to the market again?
Investors are mainly watching out for the US central bank’s decision on interest rates, which analysts have linked to major price movements in the markets this year. In a meeting on Wednesday, they will decide how to deal with the ever-rising inflation, which exceeded expectations at 9.1 per cent for June. Analysts expect the Fed to increase its funds rate by 75bps, according to reports.
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