After rising to a near two-week high, Bitcoin declined on Wednesday, highlighting the struggle to clear a key technical hurdle and rebound to $40,000. It fell 3.7% and traded at $37,375, while Ethereum dropped 3.8 % and traded at $2,672.
Analysis suggests that Bitcoin is likely to test $40,000 soon, but its movement mirrors that of the US stock market recently. Ethereum also moves along with the S&P 500, and both hit all-time highs not long ago.
This suggests that if stocks rise, cryptocurrencies are likely to grow as well and vice versa. Stocks will rally if the Fed opts for measured monetary tightening over more aggressive moves.
"Bitcoin will continue to trade like a risky asset and most likely benefit if central banks continue to show some hesitancy in turning very aggressive with tightening monetary policy." said OANDA analyst Edward Moya. "Bank rate decisions might have a larger impact on cryptos than normal as Wall Street is looking for a cue on which direction risk appetite is headed," he added.
