Notes

Wall St Week Ahead Crypto investors are in for more uncertainty following the rocky start of 2022.


Investors are bracing for more excitement in bitcoin and the other cryptocurrencies, as worries over a hawkish Federal Reserve threaten to squelch the market's appetite for risk.



The volatility normally associated with cryptocurrencies is prominent in recent weeks. Bitcoin , the largest cryptocurrency, is up by about 33% from Jan. 24. It has been trading at $43,850, bouncing back from dropping that cut its price in half from November's record highest. Its most popular rival, the Ether, has gained around 40% since Jan. 24, at about $3,200 after a 56 percent drop from the record-setting $4,868 as of November.








Though advocates of cryptocurrencies have exaggerated their lack of connection to other assets Bitcoin and its counterparts had huge gains over the period of two years. They soared alongside stocks as the Fed and other central banks unleashed unprecedented levels of stimulus into the global economy. royal q robot owner has increased by 1,039 percent since the beginning of March, while Ethereum has increased by 2,940%. However, the rising prices of both cryptocurrencies have been slowed by frequent stomach churning selloffs.









Their recent volatility has been accompanied by a wider market selloff caused by investors updating their portfolios to make room for an even more aggressive Fed, which is now predicted to raise rates at least seven times this year in order to combats the rising cost of living. The index that is the benchmark S&P 500 index (.SPX) has dropped 5.5 percent in the year to date, while the high-tech Nasdaq (.IXIC) dropped 9.3%. dropped 9.3 percent..



A fear that an aggressive government tightening of the pace moving forward will depress the risky assets have made it difficult for some traders to maintain their positive outlook on bitcoin and other cryptos this asset class is already marked by its high volatility.








A rise in tensions within Ukraine In Ukraine, where Washington warned a Russian invasion could occur any minute, could lead to market shifts in the future Investors warned. Read more



Bitcoin was "really become the ultimate market for momentum trading and there are so many risks that can lead to a 40% drop from the midst of the night," said Ed Moya who is a senior analyst at Oanda.



The volatility of Bitcoin doesn't stop some analysts from trying to gauge the market's value, or point out potential price levels.




Analysts at JPMorgan estimate bitcoin's current worth at $38,000 . This is roughly 15% below its recent price , based upon its variability in comparison with the volatility of gold, which is another asset people often invest in to hedge their portfolios against the effects of inflation and economic uncertainty.



Vanda Research, meanwhile, published a note that the majority of bearish bets based on a weaker bitcoin price were taken at approximately $47,000 "there could be a major short-squeeze if this threshold is exceeded, and retail investors are reintroduced to crypto-trading."



Meanwhile, correlations between bitcoin and the S&P 500 climbed to an all-time high on Jan 31, according to data at BofA Global Research, undercutting some of the arguments made by those hoping to use bitcoin as an insurance against market volatility.



The next week, investors will receive minutes from the Federal Reserve's most recent monetary policy meeting, due to be released on Wednesday. Walmart (WMT.N) as well as chip maker Nvidia Corp (NVDA.O) will be among the companies to report numbers as corporate earnings season kicks off.



A few investors are getting ready to weather the volatility of bitcoin, betting that the longer-term value in blockchain technology the built-in supply limit and the impact it creates, will last despite the constant price swings.



Jurrien Timmer, director of macro-economics at Fidelity said that the current Bitcoin speculation to turmoil experienced by tech stocks in that period of dot-com more than two decades ago. This was a boom-and-bust time that saw the smallest number of companies remain.



"Amazon is still around and Apple is around as well and they're both bigger than ever. the idea is that with bitcoin, it will be like Apple," the analyst said. "But bitcoin isn't immune to these waves of speculation or sentiment."



Bitcoin could reach $100 million by 2023. Timmer claimed, in accordance with his supply/demand models.



Some believe that mature cryptocurrency like bitcoin and ether aren't going to deliver the kind of amazing gains they have seen since their creation.



Instead, they are turning at the universe of brand new alternative currencies that are developing to take advantage of the wealth flowing into the crypto market, including the metaverse and NFTs. NFTs accounted for more than more than $30 billion of venture capital investment this year, as per PitchBook.



There are altcoins that include cosmos Terra Luna, and Polkadot that are all down by 20.5 percent 3, 38 and 25.5 percent for the year to date, respectively, as per coinmarketcap.com.



The understanding of the risks that come with the financial sector and decentralized banking is going to be one of principal challenges facing investors by 2022, said Lily Francus, director of quantitative research strategy at Moody's Analytics.



Cryptocurrencies "are going to be extremely volatile in the coming years, but there are significant players on both the institutional and retail side that are still expanding, so the market continues to grow," said Oanda's Moya.




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