Bitcoin experienced a significant downturn on Wednesday, descending below the $66,000 mark after fluctuating earlier in the day. The digital asset, which traded as high as $68,500 overnight, is now down 2.5% in the past 24 hours, with the latest price at $66,200.
As crypto stocks began the day on a positive trajectory, they quickly reversed course, reflecting losses across the board. Notably, the shares of Coinbase shifted from a 3% gain in the morning to a 2% decline by the afternoon. Similarly, MSTR, the largest corporate holder of Bitcoin, saw its value decrease by approximately 3% as the underlying cryptocurrency weakened.
The broader market sentiment was further dampened by hawkish remarks from the minutes of the Federal Reserve”s January meeting. While the central bank”s decision to pause rate cuts was anticipated, the suggestion of potentially increasing rates if inflation persists was unexpected. This outlook contributed to a strengthening U.S. dollar, with the dollar index (DXY) reaching its highest level in almost two weeks.
A stronger dollar typically exerts downward pressure on risk assets such as cryptocurrencies, and Wednesday”s decline in Bitcoin followed this trend. With this latest slide, Bitcoin is now on track for its fifth consecutive week of losses, a streak not seen since the prolonged bear market of 2022.
Currently, Bitcoin faces a crucial test at the $66,000 level, which had previously acted as support. Last week, this area played a pivotal role in enabling a rebound above $70,000. Should this support level fail, traders may begin to target the early February lows around $60,000 or potentially lower.
