Bitcoin faces further falls ahead of Fed meeting
Bitcoin is trading flat ahead of US Federal Reserve Chair Jerome Powell's meeting at the Senate Banking Committee on Tuesday.
The world’s largest digital asset (BTC-USD) is down 0.2% to $22,412, while ether (ETH-USD) is stuck at $1,565.
The global cryptocurrency market cap on Tuesday stood at $1.07tn, an increase of 0.3% in the last 24 hours, according to CoinGecko data.
However, according to data from Cryptoquant the overall crypto-market is showing bearish signals, and betting on further declines.
Read more: Crypto live prices
According to on-chain analysis by Cryptoquant: "The market is mostly bearish and is betting on further declines, according to funding rates.
"The funding rate of perpetual futures normally signals the current market bias, at which point traders build short positions.
"The last such negative hourly value was during December 2022, with the price of Bitcoin around 16 thousand US dollars."
Fed’s Jerome Powell heads to Capitol Hill
Crypto-traders are poised in caution ahead of Jerome Powell's appearance before the US Congress this week as part of the Fed's semiannual testimony on monetary policy.
US legislators, and investors, are worried that more hawkish rate hikes by the Federal Reserve will dry up economic activity in the US, whilst having only a limited effect in bringing down inflation.
The Fed has raised its benchmark interest rate eight times over the past year, most recently a quarter percentage point increase early last month that took the overnight borrowing rate to a target range of 4.5% to 4.75%.
Higher interest rates encourage investors to save in fiat currency such as the dollar, and a retreat from high risk assets such as bitcoin.
Cryptocurrency traders are hoping for a signal of a less hawkish Federal Reserve at Tuesday's Senate Banking Committee meeting.
Read more: Bitcoin down 5% ahead of Mt Gox payouts
Cryptocurrency market facing multiple headwinds
The market is already facing stern headwinds from the recent problems at Silvergate bank, and the upcoming Shanghai upgrade of the Ethereum network (ETH-USD).
Stock in the crypto-friendly Silvergate bank (SI) is down 95% over the past year, and it is facing US regulatory probes due to the collapse of significant clients such as FTX and related hedge fund Alameda Research.
Ethereum's Shanghai upgrade will allow those who have 'staked' their ether to withdraw it, giving them the option to sell on the market again, 'staking' being the process of locking ether on the blockchain for a set amount of time to validate the network.
Also, the upcoming creditor payouts from the bankrupt MT Gox exchange could impact the cryptocurrency market.
The civil rehabilitation trial surrounding the Tokyo-based bitcoin exchange has concluded and payouts to creditors are scheduled to begin this Friday, March 10.
However, there are fears that the 142,000 bitcoin to be released to creditors could be dumped on the market as soon as they become available.
Read more: How a bitcoin court case in Japan may create crypto millionaires
The magnitude of a possible $3bn bitcoin payout has led crypto-analysts to warn of a possible market shock where recipients dump their newly acquired bitcoin en masse after taking back ownership of their coins.
Watch: Ukraine purchasing military equipment with crypto | The Crypto Mile
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