Bitcoin and Cryptocurrencies Experience Retreat amid Market Sell-Off

Bitcoin and other cryptocurrencies faced a decline on Thursday as risk-sensitive assets suffered a wide-ranging sell-off. The initial surge that followed Fitch's downgrade of the U.S. credit rating was short-lived. Bitcoin's price dipped by over 1% in the past 24 hours, settling just above $29,000. This movement pushes it further away from the $30,000 to $31,000 range that has provided steady support for the leading cryptocurrency.

Analyst Alex Kuptsikevich of broker FxPro believes that Bitcoin's ability to fend off the selloff is only temporary and that its decline is inevitable. Initially, Bitcoin experienced a surge on Wednesday after Fitch downgraded U.S. debt, briefly surpassing the $30,000 mark. Crypto enthusiasts saw this as a sign of eroding confidence in the traditional financial system and an opportunity to highlight the appeal of decentralized alternatives. However, Bitcoin has since retreated. The downward trend in digital assets mirrors the decline in the stock market, where the Dow Jones Industrial Average and S&P 500 experienced significant drops on Wednesday and were anticipated to fall further on Thursday as Treasury yields rose.

Bitcoin now hovers close to its critical technical levels below its 50-day moving average, which sits at around $29,500. It faces the risk of further decline. According to Katie Stockton, managing partner at technical research firm Fairlead Strategies, Bitcoin's next support level is at its 200-day moving average of $26,700. There is also secondary support in the long term around the $25,200 mark.

Apart from Bitcoin, Ether—the second-largest cryptocurrency—saw a 1.5% decline, settling at $1,830. Smaller cryptocurrencies, including Cardano (down 4%) and Polygon (down 2%), also experienced weakness. The situation was similar for memecoins, with Dogecoin dropping 4% and Shiba Inu shedding 2%.

Overall, the retreat of Bitcoin and other cryptocurrencies is evident amidst the broader market sell-off. It remains to be seen how these digital assets will fare in the coming days as the market volatility continues.

Written by Jack Denton