17 May 2021 Josphat Kariuki
A Red Day For Cryptos As Interest Rates Continue To Cause Concerns
The crypto sector experienced yet another downwards price push amid raising concerns about higher interest rates.
Bitcoin, for example, fell as low as $43,000 – more than a quarter than its all-time high of nearly $65,000. The altcoin leader, Ethereum, lost $400 off its price and it is currently trading at $3,500.91.
Source: CryptoBrowser.io
The rest of the sector experienced around 5%-10% daily losses, with several currencies like Polkadot (DOT), Bitcoin Cash (BCH), EOS, and Bitcoin SV (BSV) recording 12%-15% lower prices.
Meanwhile, the crypto sector took yet another hit, as Financial Times reported that only 2,9% of Tether’s reserves were actually backed by US Dollars, rather than the 100% Tether claims. The importance of Tether’s reserve is emphasized by the fact that Tether is the largest stablecoin and is also dubbed as “a gateway to Bitcoin”.
Ethereum dropped sharply against the US dollar during the past weekend, as the four-hour chart shows the pair moved sharply below the lower line of the ascending channel. ETH/USD dropped below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) dropped accordingly. The current situation implies that bears are taking over the market, possibly pushing ETH/USD to the next key support at 3,200.
On traditional markets, the Australian dollar dropped as China’s intervention in the market pushed iron ore prices down. Iron ore and the Australian dollar have been acting in conjunction since iron ore is the biggest earner of foreign currency.
US futures also dropped slightly, due to the quarterly reports from some of the biggest companies. Businesses like Walmart, Home Depot, Lowe’s, and Target would post their reports later this week. Among the top companies, the news about AT&T and Discovery merging their media businesses and resulting in a $150 billion streaming giant. This puts the new corporation against companies like Netflix and Disney+. The deal comes five years after AT&T bought Time Warner for $85.4 billion.
Data coming from the United States is also showing that the US economy is in a recovery mode and the rate is faster than expected. The recovery means that the Federal Reserve will be forced to start tightening its monetary policy, which potentially includes increasing the interest rates.
EUR/USD showed little to no price movement during the Asian trading session. The pair is trading at 1.2130, which is slightly above the 25-day moving average. However, the RSI is at 56, which is neutral, but the pair might continue its slightly upwards path, but a rising wedge pattern is usually denoted as a bearish sign.
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