Bitcoin (BTC) fell sharply against the US dollar on Wednesday, closing 1.8% lower at less than US$29,200.
This morning’s Asia trading session saw a further 0.6% decline to a flat US$29,000.
Though bitcoin’s correlation with tech stocks is a matter of debate, there is little doubt that the sharp fall on the Nasdaq Composite fed through to the world’s largest cryptocurrency.
Nasdaq’s 2.4% dip coincided with rating agency Fitch’s surprising downgrade of US government credit from AAA to AA+.
Fitch decried the “steady deterioration” in US governance and “a high and growing general government debt burden” when submitting the downgrade, though US Treasury Secretary Janet Yellen shot back, deeming it "arbitrary" and based on outdated data from 2018 to 2020.
Arbitrary or not, the downgrade bit into risk assets including bitcoin, putting another roadblock in its return above US$30,000, especially given the renewed strength of the greenback.
Luckily for bitcoin bulls, US$29,000 appears to be a solid resistance line, having bounced off it overnight, while also presenting a strong buy wall on Binance’s order book.
Bitcoin's Fitch slip – Source: currency.com
Ethereum (ETH) also fell 1.8% yesterday, hitting the midnight bell at US$1,839 before inching further down to US$1,833 this morning.
Bitcoin dominance has returned above 50% following a cooling off in the altcoin space, which was unusually strong of late.
Shiba Inu (SHIB) remains the only top-20 altcoin in the green week on week with 4.5% of gains, while Ripple (XRP), Dogecoin (DOGE), Tron (TRX) and Polygon (MATIC) have all racked up large-single-digit losses.
Global cryptocurrency market capitalisation currently stands at US$1.16 trillion, having dipped 1.85% overnight.
Litecoin halves
Payment-based cryptocurrency Litecoin (LTC) has completed its quadrennial halving event, in which miner rewards, and by extension the rate of inflation, is slashed by 50%.
Halving is often associated with a surge in token value, but this has not necessarily been the case for LTC on this occasion.
The 11th-largest cryptocurrency by market cap actually dipped more than 6% against the US dollar post halving to hit a four-week low of US$85.60.
Combined with Fitch’s surprising US debt downgrade, Litecoin’s halving may have already been priced into the market, creating a ‘sell the news’ scenario.
The LTC/USDT pair did hit a 16-month high in early July, suggesting much of the price discovery was already pencilled in.
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