Bitcoin, the world’s largest cryptocurrency, slid below key levels on Tuesday and was trading at a one-month low as a media report outlined allegations of wash trading against major exchange Binance.
Sentiment was also on edge ahead of a Federal Reserve decision on interest rates this week, which spurred some flows into the dollar and out of risk-driven assets as markets awaited an interest rate hike from the central bank.
Bitcoin fell 2% to $29,107 by 00:19 ET (04:19 GMT), after sinking as low as $28,905 late-Monday. The token now appears to have slid below key support levels, and could sink as far as $25,000 to $26,000 before finding new support, according to analysts at IG.
The Wall Street Journal reported on Monday that Binance CEO Changpeng Zhao said in a memo that the exchange may have engaged in wash trading, which is a method of artificially inflating trading volumes on an exchange, during the debut of its Binance.US entity.
The report comes just a month after the U.S. Securities and Exchange Commission (SEC) launched a lawsuit against Binance and Zhao for violating securities laws, as well as engaging in wash trading. The lawsuit had further dented sentiment towards crypto, during a time when the industry was already reeling from a dwindling retail interest after a series of high-profile bankruptcies in 2022.
Zhao had denied the SEC allegations.
Still, sentiment towards the crypto market deteriorated after the WSJ report, with other major tokens such as Ethereum and Ripple also logging steep losses this week.
Broader markets were also largely risk-averse ahead of a Fed meeting this week, with the central bank widely expected to raise interest rates by 25 basis points on Wednesday.
But while the rate hike appears to be priced in by markets, traders were on edge over any signals on future rate hikes from the central bank.