Bitcoin Has Stumbled. Thats Not a Good Sign for Stocks. – Barron’s

Bitcoins drop isnt much of a surprise. Interest rates have risen in the past few weeks as markets worry that the Federal Reserve would keep lifting rates to combat high inflation. Risk assets like stocks and cryptocurrencies had rallied in the summer precisely because Wall Street had hoped that the Fed would slow down its rate hikes as inflation cooled. But with rates now not far below their multiyear highs, Bitcoin is facing pressure. When risk-free assets like government bonds offer a higher rate of return, it makes buying riskier assets less appealing.

Bitcoin, unlike the stock market, is near a danger zone. At just over $21,000, its hovering just above key support around $19,000, where buyers have previously stepped in to send the price higher. A move below that price could open the door to more losses ahead with buyers absent. Bitcoin is dangerously close to resuming the long-term downtrend, wrote John Kolovos, chief technical strategist at Macro Risk Advisors.

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Bitcoin Has Stumbled. Thats Not a Good Sign for Stocks. - Barron's