Bitcoin eyes first two-day drop of 2023 as Microsoft Teeth Mood

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(Bloomberg) — Bitcoin is flirting with its first straight decline since the start of the year following a poor earnings outlook from tech leader Microsoft Corp. that rattled broader investor sentiment.

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The largest token fell 2.5% and traded at around $22,380 as of 9:26 a.m. in Singapore on Wednesday after falling slightly in US time. A range of smaller coins, from Ether to Cardano to Avalanche, were also in the red.

Digital assets are among many investments that surged in early 2023 on bets that central banks will slow or even reverse interest rate hikes in the coming months. But the bullish stance is vulnerable to reversals, such as if the Federal Reserve at its policy meeting next week pushes back on dovish expectations in the ongoing fight against inflation.

The disappointment over Microsoft’s forecast has spread to crypto, which is still quite strongly correlated to tech stocks, according to Tony Sycamore, market analyst at IG Australia Pty.

With assets at risk, it was almost like trying to hold a balloon underwater so far this year, he said. The market now has doubts as to how far to push them.

A burst of short coverage that likely helped propel Bitcoin’s 36% jump this month could also run out of steam, said Hayden Hughes, managing director at social trading platform Alpha Impact.

Prices began to reverse as hedge funds resumed short positions after taking over the weekend, he said.

technical obstacle

Katie Stockton, founder of Fairlead Strategies LLC, a research firm focused on technical analysis, sees significant resistance for Bitcoin at around $25,000. This is a level the token was last at in August.

The story continues

Stockton said in a note this week that it is neutral over the medium term with the return of overbought conditions for Bitcoin.

Bitcoin and a gauge of the top 100 tokens both lost more than 60% last year, hit by rising borrowing costs and a series of crypto booms. The overall market value of digital tokens rebounded by around $250 billion in January, according to data from CoinGecko.

For crypto market prices: CRYP; for the best crypto news: TOP CRYPTO.

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