Bitcoin, Ethereum, and other major coins are losing value after Twitter’s chief financial officer went on an anti-crypto rant, souring the market mood. The dollar is stronger than it has been in at least one year, and its continued growth will likely add to bearish sentiment.
Today, Bitcoin has lost 4.3% so far. At the time of writing, Ethereum had lost 5.3% according to CoinDesk data. Binance Coin, Litecoin, and Polkadot are also declining.
Segal: Crypto investments ‘don’t make sense now’
After Twitter’s CFO Ned Segal went on record saying that investing cash holdings into crypto assets like bitcoin “doesn’t make sense” right now, the big selloff began. According to Segal, absence of accounting rules and price volatility prevent the social media giant from making such investments.
Another factor behind the decline is the $1 trillion bipartisan infrastructure bill signed by U.S. President Joe Biden yesterday, giving traders further incentive to take some risk off the table. This bill will require brokers to inform the IRS about any transaction over $10,000.
The crypto community has expressed concern over the definition of the word “broker”, which could make node operators and miners fiscally liable. MicroStrategy, Tesla, and Square are among the few companies that acquired bitcoin as a reserve asset.
Dollar index hits fresh high, foreboding crypto gloom
The dollar index, which tracks USD value against other major fiat currencies, reached 95.50 today, which is a 16-month high. Fears surfaced that the Federal Reserve might raise interest rates to contain inflation.
Generally, interest rate increases are bullish for domestic currencies. As Bitcoin is priced in USD, like gold, a strong dollar is considered bearish for the cryptocurrency.
According to analysts, Bitcoin might suffer further short term losses. Stack Funds cofounder Matthew Dibb told CoinDesk:
We have noticed some larger sales occur on Bitfinex as well as openings of new short positions. While liquidations so far are quite low by historical standard and funding rates are approaching flat, we could see a further cool-off in BTC for the short term as momentum is beginning to stall.
Bitcoin might see further decline today
If US retail sales data beats predictions, Bitcoin and other cryptocurrencies might see a deeper drawdown later today. If this happens, Fed officials will ring the alarm over inflation, adding to dollar strength and bolstering rate growth concerns.
Retail sales data is scheduled for release at 13:30 GMT today. FX Street expects consumer spending to have increased by 0.7% from the previous month.
