Bitcoin continues to retreat as the 200-week average focuses again

Genesis notes a pause in the accumulation of long-term investors

Bitcoin fell on its fifth day in the past six in an ongoing retreat to a key technical level as investors pondered mixed signals from Federal Reserve officials about the potential pace of interest rate hikes.

The largest cryptocurrency fell as much as 3% to $22,716.59, its lowest level since Aug. 10 and close to its 200-week moving average of about $23,000, which Genesis Trading pointed to as a historically focused metric for the market. Ether number two fell by as much as 3.8%. Companies like Polygon, Solana and Avalanche were down 7% or more.

"The rally that brought it back to $25,000 has lost significant momentum, and it could start to have a stronger impact on the price of bitcoin," Craig Earlam, senior market analyst at Oanda, said in a note Thursday. "A move below $22,500 could mean that the rally has now run its course."

Cryptocurrencies have been hit this year as the Fed has raised rates amid elevated inflation rates and risky assets more broadly, such as big tech stocks, have struggled. Bitcoin and ether have fallen about 50% since Dec. 31. However, they are lagging behind their worst levels in mid-June amid preliminary optimism that inflation could peak, and as the Ethereum network prepares for the long-awaited Merge update.

"In the short term, correlational risks are intensifying as stocks, especially technology names, delicately sit at key resistance levels," Jamie Douglas Cutts, senior market structure analyst at Bloomberg Intelligence, wrote Thursday. 

In addition, crypto veterans can cool down with their purchases.

"After steady growth in the first half of 2022, the amount of bitcoin that did not move during the year leveled off, signaling a pause in the accumulative behavior of long-term investors," Ainsley To, Mark Chan and Noel Acheson of Genesis wrote on Thursday.