The crypto market traded lower over the weekend, with US inflation data, potential price moves US Federal Reserve (Fed), and bearish-looking tech stocks weigh on investor confidence and raise concerns about the way forward.
On Monday at noon UTC, Bitcoin (BTC) It is down 3.7% over the past 24 hours and over 11% over the past week, trading at $41,099. At the same time, Ethereum (ETH) It was down 6% the day before and more than 13% for the week at a price of $3,057.
The moves over the weekend followed last week's signals from the Fed that the central bank will not let up on its planned tightening measures.
Commenting on the outlook for the US economy, Cleveland Federal Reserve Chair Loretta Mester said she believes a US recession can be avoided even as the Federal Reserve continues to tighten. “It will be a challenge, but we can do it,” she said. for a Bloomberg report.
Bitcoin 2022 fails to excite traders
Perhaps surprisingly, the industry's premier conference Bitcoin 2022Held in Miami from Thursday to Saturday last week, it did not translate into enthusiasm among bitcoin traders.
Ahead of the event, BTC fell sharply on Wednesday, before paring some of its losses as the conference began on Thursday. However, as of Friday, the bears came back in force to push the currency lower again, with the selling continuing on Sunday and Monday morning in Europe.
As usual, the weekend sell-off sparked spikes in liquidations from leveraged bitcoin derivatives traders on exchanges. According to data from purseMore than $40 million of bitcoin long positions were liquidated during 12-hour periods on both Friday and Monday.
The liquidations followed a $60 million liquidation of bitcoin long positions in 12 hours when the market fell sharply on Wednesday last week.
Watch out for US inflation
Notably, the moves in bitcoin and the broader crypto space also come as the market expects new US inflation numbers on Tuesday this week.
As in the previous month, the figure is expected to be high, with the consensus among analysts being a consumer price index (CPI) reading of 8.4%, according to Bloomberg.
Although generally believed to be good for hard assets like bitcoin, rising inflation is causing concern among market players that it could force the Fed to move aggressively to lower prices.
“[T]The Fed is caught between a rock and a hard place when it comes to tackling runaway inflation without sinking the economy,” Antoni Trenchev, managing partner at crypto loan and lending firm. Nexus (NEXUS) said Bloomberg in comments today.
According to the commercial team of the Bitfinex cryptocurrency exchange, there is “a sense of nervousness” that “has crept into the market amid low volumes over the weekend.”
The team argued that
"The prospect of further interest rate hikes and growing concerns about the economic environment may become recurring themes this year. As is the case with the stock market, we may see more bouts of episodic volatility in the coming months." ".
However, there is some positive news, as they also argued that as bitcoin adoption continues to grow, “the underlying strength of the ecosystem could set it apart from mainstream markets.”
Correlation Between BTC and Tech Stocks Grows
On the part of bitcoin, the movements of the past week have largely followed those of the stock market and, more specifically, the movements of heavy technology. nasdaq 100 index.
However, this is not something new. There has been a consistent positive correlation between BTC and tech stocks since 2019, and the correlation grew stronger last week as both markets fell in tandem.
What is concerning about the increased correlation, however, is what some consider to be a bearish outlook for tech stocks at the moment. This is largely due to the fact that the technology sector has one of the highest valuations in the stock market, and therefore it is reasonable to expect that this sector will also be the hardest hit as the Fed continues to raise interest rates. interest in the US
According to Steven Cress, Head of Quantitative Strategy at looking for alphamany tech stocks are "significantly overvalued and vulnerable to government attack." Applethe most valuable of all US-listed tech companies, is "grossly overvalued," strategist sayinggiving it an appraisal rating of 'F'.
Arthur Hayes, a former CEO of crypto derivatives exchange, is also somewhat bearish on the short-term outlook for both the Nasdaq and the crypto market. BitMEXwho argued in a blog mail today that tech stocks will fall further.
The graph tells me [Nasdaq] it will continue lower, test its local low and break below it decisively," Hayes said, adding that "the next stop after that is to test 10,000."
The Nasdaq 100 Index closed at $14,327 on Friday. Therefore, Hayes' prediction represents a significant drop for the index, taking it back to a level not seen since July 2020.
However, according to Hayes, it is not that stocks are leading crypto down, but the other way around, as crypto markets are “the only free markets left globally.”
“As such, they will drive stocks lower as we head into recession, and they will drive stocks higher as we work our way out of it. Bitcoin and Ether will bottom out long before the Fed steps in and changes its policy from tight to easy,” Hayes wrote, before giving his price prediction:
“By the end of the second quarter of June this year, I think Bitcoin and Ether will have tested these levels:
bitcoin: [USD] 30,000
Ether: [USD] 2,500.”
However, he emphasized: "There is not much science in these numbers, apart from an intuition" and "Nothing is certain: I only ascribe probabilities to the results and trade accordingly."
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Learn more:
- April is historically a "very strong month" for BTC; AVAX and LUNA show potential: analysts
- Bitcoin lags behind Ethereum and Altcoins despite Strike, Robinhood and Legal Tender news
- Crypto Bottom is in and Expecting a 'Massive Rally,' Predicts Pantera Capital
- Mentally Prepare for Lower Bitcoin Prices as Rates Rise, Bitcoin 2022 Panelists Warn
- The Fed can't stop prices from rising soon, but there's also good news
- Weekend Crypto Trading Offers Clues to Stock Investors as Tesla Faces Shanghai Shutdown
- When Bitcoin meets inflation
- How the war in Ukraine is increasing inflationary pressure in all regions of the world
- As inflation is here to stay, Bitcoin, Ethereum and gold investors will gain, but prepare for volatility - BitMEX
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(Updated at 13:29 UTC with a new last sentence.)
