Bitcoin (BTC) and the Broader Market Follows the U.S Equities into the Red

It was a bearish day for Bitcoin (BTC) and the broader crypto market on Wednesday.

Bitcoin fell by 1.65% to end the day at $41,676, with resistance at $42,500 pegging Bitcoin back on the day.

Elsewhere, Litecoin (LTC) slid by 3.77%, with Ethereum (ETH) ending the day down by 2.39%. Cardano (ADA) was amongst the biggest losers on the day, however, sliding by 8.29%.

Cryptos and Interconnectedness with the U.S Equity Markets

Movement across the crypto market was once more aligned with the U.S equity markets mid-week. Market angst over inflation and FED monetary policy continued to weigh on riskier assets.

The NASDAQ followed Tuesday’s 2.60% tumble with a 1.15% slide. Things were not much better for the Dow and the S&P500, which saw losses of 0.96% and 0.97% respectively.

For regulators and IMF, the recent trends have been a source of concern. Earlier this year, the IMF had raised concerns over the interconnectedness of the crypto and U.S equity markets. The IMF’s concerns were aligned with those of the Bank of England. Late last year, the BoE had called for a global economic framework to address risks to financial stability.

For the crypto market, increased regulatory chatter and activity has contributed to the bearish start to the year. Market sentiment towards FED monetary policy, which has weighed heavily on the NASDAQ, has also been key.

In spite of the bearish moves, the Bitcoin Fear & Greed Index has avoided a fall back to a current month low 10/100. At the time of writing, the Bitcoin Fear & Greed Index sat at 24/100. We’ve seen the index hover at current levels for a number of days. Regulatory chatter and any apprehension ahead of today’s U.S Congress subcommittee hearing on cryptocurrencies have failed to instill greater investor fear.

For the Day Ahead

With market jitters over inflation likely to linger, economic data from the Eurozone and the U.S will draw interest later today.

Finalized Eurozone inflation and German wholesale inflation figures are due out from the Eurozone. From the U.S, jobless claims will also be key. Rising consumer prices and weaker labor market conditions would be a negative for riskier assets.

Following two days of heavy losses for the NASDAQ, however, dip buyers could deliver both the NASDAQ and cryptos with support.

Much will depend on updates from today’s U.S Congress subcommittee hearing. A key topic will likely be crypto mining and the impact on the environment. Bitcoin mining has had plenty of airtime in recent weeks…

At the time of writing, Bitcoin was up by 0.33% to $41,814. A break back through to $42,500 levels would bring $43,000 levels into play. Avoiding a fall back through today’s $41,798 pivot will be key, however. A pullback to sub-$41,500 levels would bring sub-$40,000 into play.

Looking at the U.S futures, the NASDAQ was up by just 26 points at the time of writing.