Notes

Wall St Week Ahead Crypto investors will be more uncertain after a rocky start to 2022.


Investors are ready for further swings in bitcoin as well as other digital currencies, as concerns about the aggressiveness of the Federal Reserve threaten to squelch the market's appetite for risk.



The volatility that is typically associated with cryptocurrencies has been displayed in recent weeks. Bitcoin is the largest cryptocurrency, is up approximately 33% since Jan. 24 and was recently trading at $43,850, bouncing back from it's plunge, which cut its price in half from November's record-setting price. The major competitor, ether , is up 45percent since Jan. 24 and is trading at $3,200 after a 56 percentage plunge from its previous record-setting $4,868 during November.








Though advocates of cryptocurrencies have claimed that they had no connection to other assets, bitcoin and its peers have seen huge gains in the last two years. They have risen in tandem with stocks as Fed along with other central bankers pumped extraordinary levels of stimulus into the world economy. Bitcoin has risen 1,039 percent since March 2020. Ethereum has seen a rise of 2,940%, but the growth in both cryptos have been slowed by a series of stomach-churning selloffs.









The recent volatility in the market has been accompanied by a wider price decline driven by investors shifting their portfolios around to account for an even more aggressive Fed which is forecast to raise rates nearly seven times in 2018 as it fights surging inflation. how can i make money used S&P 500 index (.SPX) has dropped 5.5 percent over the past year, and the tech-driven Nasdaq (.IXIC) was down by 9.3%. dropped 9.3 percent..



Beliefs that a more aggressive government tightening of the pace moving forward could stifle risky assets has made difficult for some traders to maintain their positive view regarding bitcoin and various cryptos. This asset class has already been is characterized by high volatility.








Tensions are rising in Ukraine that are escalating in Ukraine, where Washington warned that a Russian attack could start at any moment, could spur market changes across the globe according to investors. learn more



Bitcoin will "really become the ultimate momentum trade and there are plenty of risks that could cause a 40% drop from the midst of the night," said Ed Moya an analyst at Oanda.



The volatility of Bitcoin doesn't stop some analysts from looking to determine the currency's fair value or point out potential prices.



Analysts at JPMorgan estimate bitcoin's current fair value at around $38,000 , or 15% less than its present value based on its volatile nature in comparison to that for gold, another investment investors often use to hedge their portfolios against the effects of inflation and economic uncertainty.



Vanda Research, meanwhile, wrote in a report that most of the bearish bets placed on a weaker bitcoin price were placed at approximately $47,000 "there may be a large short-squeeze if this threshold is crossed and retail investors are reintroduced to crypto-trading."



Furthermore, correlations between bitcoin and the S&P 500 reached an all-time high on January 31, according the data collected by BofA Global Research, undercutting some of the arguments made by those hoping to utilize the cryptocurrency as an asset to shield against market volatility.



Investors this week will get minutes from the most recent Fed gathering on monetary policies, which will come out on Wednesday. Walmart (WMT.N) in addition to chip maker Nvidia Corp (NVDA.O) will include among the companies releasing resultsas earnings season kicks off.



Some investors are ready to take on the volatility in bitcoin, betting on the long-term viability Blockchain technology the built in supply limit, and the impact on the network its technology produces, will last despite the constant price swings.



Jurrien Timmer director of macro-economics at Fidelity said that the current cryptocurrency speculation to fluctuations in tech stocks seen during the dotcom era nearly two decades ago. boom and bust cycle that left very few companies remain.



"Amazon is still around and Apple remains in business and they're stronger than ever and the assumption is that for bitcoin, it'll do much the same" he said. "But it's not immune to the waves of speculation and sentiment."



Bitcoin could hit the $100,000 mark by 2023, Timmer claimed, according to his supply/demand model.



Other analysts believe that mature cryptocurrencies like the bitcoin and ether won't be able to produce the stunning gains they have achieved since the time of their creation.



Instead, they're looking to the wide world of alternative currencies that are designed to take advantage of the money flowing into the crypto space such as the metaverse and NFTs that saw around $30 billion worth worth of venture capital investment last year, according PitchBook.



A few altcoins are cosmos Terra Luna, and Polkadot that are all down by 20.5% three times, and 25.5 percent year-to-date, respectively by coinmarketcap.com.



Understanding the risks associated with the financial sector and decentralized banking is going to be one the most significant challenges for investors by 2022, said Lily Francus, director of quantitative research strategy at Moody's Analytics.




Cryptocurrencies "are likely to remain extremely uncertain in the future, yet there are significant players both on the institutional side and the retail side that are still growing, so interest continues to grow," said Oanda's Moya.




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