Bitcoin (BTC) reversed course while the euro’s two-day bounce stalled, with observers eyeing the European Central Bank’s (ECB) reaction to the impending storm of high inflation and low growth.
CoinDesk data shows the top cryptocurrency by market value fell to $39,000 during Asia hours, nearly reversing Wednesday’s 8% spike brought by U.S. President Joe Biden’s crypto executive order.
“Market dropped again around 1:30 UTC during the Asian trading on long liquidations washouts which are still dominating the leverage markets,” Laurent Kssis, a crypto exchange-traded fund expert and director of CEC Capital, said. “Any potential of a pullback seems futile due to the selling pressures these liquidations create.”
The euro-dollar exchange rate (EUR/USD) was flat at around 1.1065, having bounced nearly 200 pips (usually the last decimal place of price) in the preceding two days, according to TradingView.
Historically, the U.S. Federal Reserve has had the biggest impact on crypto markets and ECB rate decisions have had little to no relevance. However, Thursday’s decision is pivotal, according to one observer.
“At present, we already know that the Fed will raise interest rates, so no matter how the U.S. market changes, this thing will happen. The most considerable influence at the moment may be the hawkishness of the European Central Bank this week,” said Griffin Ardern, a volatility trader from crypto-asset management company Blofin.
“Any unexpected move by the ECB could trigger a fall in the market,” Ardern added.
The ECB is scheduled to announce its decision on monetary policy on Thursday, March 10, at 12:45 GMT (7:45 a.m. ET). ECB’s President Christine Lagarde will hold a news conference at 13:30 UTC, or 45 minutes after the ECB’s policy announcement.
Markets have recently scaled back expectations for the ECB tightening as the ongoing Russia-Ukraine war is expected to push the European economy into recession characterized by high inflation.