Cryptos suffer as they fear a tougher Fed; Bitcoin falls to $30,000

Falls in the cryptocurrency market. Bitcoin (BTC) drops 2% in the last 24 hours and is close to $30,000, a level it briefly lost. For its part, Ethereum (ETH) falls 3.5% and drops below $1,900.

This sharp correction is due to several factors that occurred on Thursday, a session that also saw new annual highs near $31,500. On the one hand, the minutes of the June Federal Reserve (Fed) meeting showed that US central bank officials are considering continuing to raise rates, albeit at a slower pace than expected.

Specifically, Fed members noted that "further moderation in the pace of policy tightening was appropriate to provide additional time to observe the effects of cumulative tightening and assess its implications for policy."

The minutes also showed that some central bankers favored a 25 basis point increase, arguing that "the labor market remained very tight". This hypothesis was endorsed by the June employment survey conducted by the ADP consulting firm, which showed a very surprising figure: the U.S. economy created 497,000 jobs in the sixth month of the year. Official employment data will be released today, on Friday.

These two factors, coupled with a much stronger-than-expected services ISM (rebounded to 53.9 points from 50.3 previously and versus 51 points expected by the consensus), pushed digital assets down... and equities, whose correlation with Bitcoin has plummeted in recent weeks.

Despite this, many analysts point out that the prevailing sentiment in the market is one of optimism, especially after yesterday's pronouncement by Larry Fink, CEO and chairman of BlackRock. The celebrated investor, once a well-known crypto-skeptic, assured that Bitcoin has the potential to "revolutionize finance" and stated that he will work with the Securities and Exchange Commission (SEC) to ensure that the Bitcoin spot ETF (exchange-traded fund) proposed by the world's largest asset manager will see the light of day.

"This is a major pivot from Fink and provides optimism that other crypto skeptics could change their tune in the near future," commented Edward Moya, senior market analyst at OANDA.

For the expert, the reigning cryptocurrency "appears to be facing some price barriers ahead of the $32,000 level and performance is gaining attention given some of the weakness that is emerging with global equities." "For the Bitcoin rally to continue, we will need to get a confirmation that the SEC will grant permission for a spot-Bitcoin ETF in the US. Bitcoin remains stuck in a range again, trading between $28,000 and $31,500," he added.

Meanwhile, Naeem Aslam, chief investment officer at Zaye Capital Markets, stressed that, on a technical basis, "the current move is more about the test of the next resistance level, which is at 40K, and anything before that doesn’t really have any significant value."

"Therefore, the price action will continue to move higher in the coming days, and there is actually also a possibility of a buy a rumour and sell the fact, which means that the Bitcoin price may continue to move in the event of the Bitcoin ETF getting approved, and when it actually sees the light of day, we may see a bit of a sell-off," he warned.

Similarly, Aslam noted that "the current momentum in Bitcoin is certainly helping other meme-coins as well, which are also moving higher as Bitcoin begins to move."

All in all, none of the major altcoins register upward movements today. Ripple (XRP), Dogecoin (DOGE) and Cardano (ADA) fall the most, dropping as much as 3%.