Bitcoin back down to around $20,000 after Jackson Hole caution

Bitcoin appeared stuck around $20,000 on Sunday as part of a wider cryptocurrency-market retreat, amid concern about the Federal Reserve’s rate-hike path.

The largest token was little changed as of 7.45am in New York. That’s after a two-day drop of 7.6 per cent, moving in tandem with US stocks on Friday after Fed Chair Jerome Powell’s speech at the Jackson Hole conference. The wider crypto market retreated on Sunday, with the MVIS CryptoCompare Digital Assets 100 Index dropping 1 per cent in its fourth straight day of declines.

“Money is flowing out of risky assets. Crypto followed the sharp adjustment of the US stock market” after Powell’s remarks, said Cici Lu, chief executive officer at consulting firm Venn Link Partners. “Markets didn’t like what he had to say and Bitcoin is resuming as a high-beta asset.”

The $20,000 level acted as support for Bitcoin when it hit lows in recent months, but the cryptocurrency had worked its way higher in recent weeks. Before Saturday, it hadn’t been below $20,000 since July 14, and had even crossed above $25,000 earlier in August.

The gyrations have come amid uncertainty about the path and magnitude of Fed rate hikes, and the effect they could have on riskier assets.

Numerous strategists have flagged $20,000 as a key point for Bitcoin, though levels of support could lie lower as well. Fairlead Strategies’ Katie Stockton sees long-term support in the $18,300 to $19,500 area.

Fundstrat strategist Mark Newton has flagged some key areas in the $19,000 range, with a “real area of importance” around $17,500, near the June lows and which would allow for a 100 per cent alternate wave projection of the most recent decline from mid-August, he said in a note Friday.

The past two Fridays have been tough in the crypto market, with $288m of crypto longs liquidated on the most recent one, according to data from Coinglass. On Aug. 19, $562m of longs were liquidated, the most since June 13.

Second-biggest crypto Ether was holding steady on Sunday around $1,500 after dropping 13 per cent over the prior two days. It has been fluctuating in recent weeks ahead of its much-anticipated Merge upgrade, which is due in mid-September.

“Ethereum’s drop ahead of the impending Merge is also of note as bearish sentiment appears to be taking hold across all so-called risk assets,” analysts at Bitfinex said in a note Friday. “The volatility that has become so characteristic of the digital token space shows no signs of abating.”