A close correlation with Wall Street could mean further tests of this barrier in the days ahead — especially if the stock market continues to tumble.
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Bitcoin is battling to stay above $30,000 after a day of turmoil for the crypto markets.
CoinMarketCap data shows the world's biggest cryptocurrency slid to $29,944.80 in the early hours of Tuesday.
That's the lowest price Bitcoin has recorded since July 2021 — and back then, bulls managed to regain control and drive BTC to a new all-time high.
Bitcoin has managed to avoid falling significantly below $30,000 so far — and hours later, prices bounced back at hit highs of $32,500.
All of this means it's crucial to look at how stock futures are faring — potentially giving investors a sign of what lies ahead when New York opens on Tuesday.
As of 9am London time, S&P 500 futures were up 0.86%, while Dow futures had climbed 0.65%. Meanwhile, the tech-heavy Nasdaq 100's futures were up 1.42%.
Monday's stock market slide left the S&P at its weakest level since March 2021 — and there seems to be no end in sight as uncertainty over interest rates, inflation, energy prices and COVID lockdowns in China continues.
Gloom may be further exacerbated when Coinbase steps up to deliver its first-quarter financial results later on Tuesday.
Pain Spreads Across Crypto Markets
The latest Crypto Fear and Greed Index is flashing a score of 10 — indicating there's Extreme Fear in the market right now.
At its worst, the peak-to-trough fall meant BTC had slumped 12.5% in 24 hours at one point — but losses over this timeframe now stand at 5%.
Zooming out to the past seven days, and Bitcoin has fallen by 17.5%.
Only a small handful of altcoins in the top 100 by market cap are actually in positive territory — Maker, Elrond, FTX, Arweave, Qtum, Polygon and Zilliqa among them.
While "buying the dip" has been a tried-and-tested motto for Bitcoiners in recent years, the crypto markets have rarely had to contend with an economic climate where interest rates are rising.
Federal Reserve Chairman Jerome Powell has strongly suggested that further half-a-percentage-point increases are on the table for June and July — hikes that could make BTC less attractive as investors seek returns in less risky assets.
But some analysts believe the Fed may need to increase interest rates more aggressively in a bid to bring inflation back under control. As Stack Funds COO Matt Dibb told Reuters:
"The risk-reward ratio for picking up Bitcoin here has been very good in the past year or so, but we are seeing a different macro backdrop."
Other experts are at pains to point out that everything is in freefall right now — meaning that the current crash isn't about Bitcoin specifically.