Notes

Wall St Week Ahead Crypto investors are facing more uncertainty following a turbulent start to 2022


Investors are bracing for more excitement in bitcoin and the other cryptocurrencies, as worries over the hawkishness of the Federal Reserve threaten to squelch market appetite for risk in all markets.



The usual volatility associated with cryptocurrency has been on full display in recent weeks. make money game app is the biggest cryptocurrency, is now up 33% in the past month since Jan. 24 and has recently traded at $43,850, bouncing back from the plunge that cut its price by half from its November record highest. Its primary rival, ether , is up about 45percent from Jan. 24 with a price of around $3200 after a nearly 56 percent plunge from its record-setting $4,868 during November.








While proponents of cryptocurrencies once boasted of their lack of a correlation to other assets however, bitcoin as well as its rivals witnessed huge gains over past two years, rising along with stocks as the Fed and the rest of central banks pumped incredible amounts of stimulus into the world economy. Bitcoin has increased by 1,039 percent from March 2020. Ethereum has surged by 2940%, however the gains in both have been disrupted by stomach-churning selloffs.








Their recent volatility has occurred in the midst of a wider market selloff caused by investors refining their portfolios to prepare for an increasingly aggressive Fed that is expecting to raise rates in the range of seven times this year to combats the rising cost of living. The most widely used S&P 500 index (.SPX) is down 5.5 percent from the beginning of the year, while the high-tech Nasdaq (.IXIC) was down by 9.3%. dropped 9.3 percent..



Fears that a ferocious inflationary cycle by central banks moving forward will hurt volatile assets has made difficult for some traders to keep their optimistic outlook on bitcoin and the other cryptos this asset class is already marked by its high volatility.








The escalating tensions in Ukraine in Ukraine, where Washington warned a Russian invasion could happen any time, could generate market-wide volatility Investors have said. learn more




Bitcoin will "really become the most powerful trading platform and there are numerous risks that could result in a 40% decline suddenly," said Ed Moya Senior Analyst at Oanda.



Some analysts from looking to determine the currency's fair value or pinpoint potential price points.



Analysts at JPMorgan believe that bitcoin's price at around $38,000 . This is roughly 15% below its recent price - based on its relative volatility to that of gold, a different asset which investors typically use to protect their portfolios from risk of economic instability and inflation.



Vanda Research, meanwhile, revealed in a new note that the majority of bearish bets on a lower bitcoin were placed about $47,000 "there could be a major short squeeze if the threshold is reached, and retail investors are reintroduced to trading on cryptocurrency."



Meanwhile, correlations between bitcoin and the S&P500 hit the highest level ever on January 31, according data from BofA Global Research, undercutting the argument of those who hope to use bitcoin as protection against market volatility.



The next week, investors will receive minutes from the last Fed session on monetary policy that will be due out Wednesday. Walmart (WMT.N) as well as chipmaker Nvidia Corp (NVDA.O) will be among the companies that report resultsas the corporate earnings season rolls on.



A few investors are preparing themselves to weather the volatility of bitcoin, assuming on the long-term viability Blockchain technology the built in supply limit, and the impact its technology produces, will last despite the frequent price fluctuations.



Jurrien Timmer director of global macro at Fidelity is comparing the current Bitcoin speculation to volatility experienced by tech stocks during the dotcom era nearly two decades ago. boom and bust cycle that left relatively few firms left standing.



"Amazon is still going strong and Apple remains in business and they're bigger than they've ever been and the theory is that for bitcoin it'll be exactly identical," He said. "But bitcoin isn't immune to those waves of speculation and sentiment."



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



Others believe mature cryptocurrencies like Bitcoin and Ethereum are not likely to deliver the kind of astonishing gains that they have enjoyed since their inception.



Instead, they are turning to the universe of new, alternative coins that are developing to take advantage of the money flowing into the cryptocurrency space which includes the metaverse as well as NFTs that saw the equivalent of $30 billion in venture capital investments last year, according to PitchBook.




Some altcoins include cosmos Terra Luna, and Polkadot and Polkadot, which are down about 20.5% 38%, 20.5% and 25.5 percentages year-todate, respectively on the basis of coinmarketcap.com.



Understanding the risks linked to the decentralized financial system and its risks 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 unpredictable in the near future, but there are some significant players on both the institutional side and the retail side that are still growing, so interest is growing," said Oanda's Moya.




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