Home / Markets / Cryptocurrency /  Bitcoin erases early rally by diving below $21k, dominance dips in crypto market
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Free fall in global crypto market relaxed and traded on a positive note on Thursday after the US Fed aggressively hiked interest rate by 75 basis points on an expected line. Ahead of the Fed policy, markets crashed globally and cryptocurrencies also faced the heat. The leader of the crypto board, Bitcoin traded on a volatile tone while its dominance dipped marginally.

As per Reuters alert, Bitcoin falls below $21,000 down by 7% on the day at around $20,956.

On CoinMarketCap, Bitcoin traded at $21,092.41 marginally low. The crypto has touched an intraday low of $20,391.30. At the current level, the Bitcoin market cap inched over $402.06 billion. However, Bitcoin’s dominance is currently 44.44%, a decrease of 0.25% over the day.

Notably, Bitcoin which is the cryptocurrency leader jumped in the early trading session and even touched the day's high was $22,868.92.

Bitcoin's weekly drop is nearly 31% as of today. Compared to its all-time high of $68,789.63 recorded in November last year, Bitcoin has nosedived by over 69%.

At Coingecko, Bitcoin's intraday low was around $20,317.28.

Crypto markets picked up the pace and turned into the green zone after US Federal Reserve raised the interest rate by 75 basis points to 1.75% - the biggest hike since 1994 to tame 40-year high inflation.

In its statement, FOMC said overall economic activity appears to have picked up after edging down in the first quarter. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.

Further, FOMC said, "The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The invasion and related events are creating additional upward pressure on inflation and are weighing on global economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions. The Committee is highly attentive to inflation risks."

Markets took a momentary comfort from US Fed's tough stance on tackling soaring inflation.

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services earlier today said, "More than the 75bp hike in Fed funds rate, which was expected, it was the Fed chief comments and guidance that have calmed the markets, temporarily. Jay Powel's remark that "we have the tools and resolve to achieve price stability" reflects confidence in containing inflation. His guidance of a 3.4% rate by end of 2022 and a 3.8% terminal rate in 2023 reflect the determination to fight inflation. However, the presently unknown factor is whether the rising rates will tip the US economy into recession."

The global crypto market cap jumped by 0.95% to $908.85 billion up by 0.95% over the last day. While the total crypto market volume over the last 24 hours is $105.87 billion, which makes a 0.99% increase.

Bobby Lee, chief executive officer and founder of crypto storage provider Ballet Global Inc in an interview with Bloomberg TV on Thursday said, in Bitcoin, "I think we will test $20,000 and go to $19,000-$18,000," adding, "there are a lot of funds, large borrowers of Bitcoin who have liquidation positions in $20,000 range."

Bitcoin below $20,000 could trigger large liquidations of leveraged positions, putting more pressure on an asset that has already slumped more than 50% this year, as per the crypto executive.

However, Lee is still bullish on Bitcoin on a long-term basis.

On Wednesday, Micheal Saylor co-founder of MicroStrategy through his Twitter account said, Bitcoin is the only digital scarcity, backed by the world’s most secure computer network, and meets the fundamental need everyone has for a long-term Store of Value.

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