Notes

Wall St Week Ahead Crypto investors are facing more uncertainty following a an unsettling start to 2022.


Investors are ready for further flashes of bitcoin and other digital currencies, as concerns about a hawkish Federal Reserve threaten to squelch market appetite for risk in all markets.




The volatility commonly associated with cryptocurrency has been displayed during the last few weeks. Bitcoin is the biggest cryptocurrency, has risen by around 33% since Jan. 24 and was recently trading at $43,850. It's recovering from dropping that cut its value in half from November's record-setting price. Its most popular rival, the ether , is up 40% since Jan. 24 with a price of around $3200 which follows a more than 56 percent plunge from its record high of $4,868, and also in November.








While advocates of cryptocurrency once claimed that they had no connection to other assets, bitcoin and its peers experienced huge gains over the period of two years. They soared and gaining momentum alongside stocks as Fed or other central banks released incredible amounts of stimulus into the global economy. Bitcoin is up 1,039 percent since the beginning of March, while ether has risen 2,940%, but the rising prices of both cryptocurrencies have been disrupted by stomach-churning selling.








Their recent volatility comes amid a wider market selloff driven by investors refining their portfolios to prepare for an aggressive Fed which is expecting to raise rates nearly seven times in 2018 as it battles rising inflation. The benchmark S&P 500 index (.SPX) is down 5.5% year-to-date, while the tech-driven Nasdaq (.IXIC) lost 9.3%. dropped 9.3 percent..



A fear that an aggressive Central Bank tightening process going forward will be a savage blow to risky assets has made difficult for traders to maintain their positive outlook on bitcoin as well as other cryptos this asset class is already marked by its high volatility.








A rise in tensions within Ukraine which is where Washington warned a Russian invasion could happen at any moment, could trigger market movements across the board analysts said. Read more



Bitcoin It has "really become the ultimate the market that has momentum, and there's numerous risks that could cause a 40% drop completely out of the blue," said Ed Moya, senior analyst at Oanda.



Its volatility in Bitcoin hasn't stopped analysts from trying to gauge what the price of Bitcoin is or identify potential prices.



Analysts at JPMorgan believe that bitcoin's fair value at about $38,000 . This is roughly 15% below its recent price based primarily on its high volatility in comparison to that in gold, a similar asset many investors use to hedge their portfolios against the effects of inflation and economic uncertainty.



Vanda Research, meanwhile, said in a recent note that the bulk of betting on bearishness on a declining bitcoin were placed around $47,000 "there could be a major short-squeeze if this threshold is reached and retail investors return to trading on cryptocurrency."



The correlations between bitcoin and the S&P500 hit the all-time highest on Jan 31st, according to research that came from BofA Global Research, undercutting the argument for those who want to take advantage of the cryptocurrency as a hedge against market turbulence.



Investors can look forward to minutes of the Fed's recent financial policy meeting due out Wednesday. Walmart (WMT.N) and chip maker Nvidia Corp (NVDA.O) will be among the companies to announce resultsas the corporate earnings season continues.



Some investors are making plans to weather the volatility in bitcoin, betting that the value in blockchain technology its built in supply limit, and the impact it brings, will be able to endure regardless of the frequent price fluctuations.



Jurrien Timmer director of global macro at Fidelity has compared the current crypto market's volatility to the turmoil experienced by tech stocks in that period of dot-com more than two decades ago. It was a boom and bust cycle that left relatively few companies remain.



"Amazon is still around , and Apple is still around and they're bigger than they've ever been and they're hoping that for bitcoin that will be similarly," says the expert. "But bitcoin isn't immune from those waves of speculation and sentiment."



Bitcoin could reach $100 million by 2023, Timmer is claiming, following his supply/demand modeling.



Some believe that mature cryptocurrency like bitcoin and ether will not be able in delivering the incredible gains that they have had since their creation.




Instead, they are looking at the universe of brand new alternative coins in development to capitalize of the wealth flowing into the crypto sector such as the metaverse and NFTs. fallout 4 make money from settlements accounted for more than $30 billion worth of venture capital investment in 2017, according to PitchBook.



Some altcoins include cosmos, Terra Luna, and Polkadot in the range of 20.5 percent in the past three months, with 38% and 25.5 percent, year-to date, respectively, as per coinmarketcap.com.



The understanding of the risks that come with the financial sector and decentralized banking is likely to be one of the main concerns for investors in 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 significant players on both the institutional side and the retail side who are growing, therefore the interest continues to grow," said Oanda's Moya.




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