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Prospects of Fed hikes, inflation, and slower growth have hit sentiment for growth assets, including crypto. Bitcoin is now sitting just above USD40'000, after dropping below the key level. Buyers showed interest below USD40'000, as the cryptocurrency rebounded after spending a couple of hours hovering between USD39'400 and USD39'900. Bitcoin is now firmly in a range of around USD36'500 and USD47'500. 

Bitcoin extended its decline to less than USD43'000 at one point, a two-week low, before recovering to USD43'500. Expectations of tighter monetary conditions continue to dampen risk-sentiment. The drop in digital assets overall continues to mirror the direction of equities, with a high correlation. For clues on whether Bitcoin will rebound to its Tuesday highs of USD47'000, traders may pay attention to the volatility in markets, as recent communication by Fed officials has been difficult for markets to digest, increasingly pricing steeper tightening, which could endanger the global recovery. On a technical picture, a strong move past the 50-day moving average (USD43'542) should be a positive signal for a resumption of the uptrend.

Bitcoin futures burst out above the 45'000 level resistance last week and a simple projection suggests there could be new highs in the weeks ahead. There have been talks of regulating cryptocurrencies more, but the start of the war in Ukraine may delay implementation as some funds are flowing to vulnerable people through cryptocurrencies. The current rally could have more room to run.

Lately, Bitcoin has faced a more timid rebound than stocks, which have surged from severely oversold levels. However, Bitcoin is approaching an interesting technical setup, which could either see it breakout to the upside, or re-test levels around USD40'000. So far, a positive signal is forming as Bitcoin is trying to push to the upside, close the resistance line from the descending triangle. A breakout is more likely if positive momentum for stocks continues, as we have seen a positive correlation between stocks and Bitcoin since last year. 

Bitcoin rose above USD42'000, gaining 8%, as the industry awaits further detail on a US executive order which is expected to outline the US government's strategy for cryptocurrencies. Some strategists share the views Bitcoin is seen as a "refuge" or safe-haven asset, particularly in times of inflation as its supply is limited. Year to date Bitcoin has suffered 12%, the same as the S&P500, but with more volatility. Bitcoin remains 38% below its all-time high of 67'580 in November 2021. Ethereum, the world's second-largest crypto by market cap, follows a similar performance, lower by 43% from its all-time high and negative by 27% year to date. On the positive, both cryptos have held well above their January lows.