Notes

Wall St Week Ahead Crypto investors are in for more uncertainty following turbulent start to 2022


Investors are looking forward to more flashes of bitcoin and other cryptocurrencies, while worries about the aggressiveness of the Federal Reserve threaten to squelch market risk appetite.



The usual volatility associated with cryptocurrencies is evident in recent weeks. fable 3 make money is the largest cryptocurrency, has gained around 33% since Jan. 24 and recently traded at $43,850, rebounding from it's plunge, which cut its price in half from November's record-setting high. Its most popular rival, the ether is up 45percent since Jan. 24 when it was trading around $3200 after a nearly 56 percent drop from the record high of $4,868, also in November.








The advocates of cryptocurrency have previously stated that they have no correlation to other assets bitcoin and other cryptocurrencies experienced huge gains over the past two years, rising alongside stocks as Fed and other central banking institutions pumped massive amounts of stimulus into the global economy. Bitcoin is up 1,039 percent since March of 2020 and the ether price has increased 2940%, however the rallies in both cryptocurrencies have been cut short by a variety of stomach churning sales.








Their recent volatility has occurred amid a broad price decline driven by investors recalibrating their portfolios to account for an increasingly aggressive Fed, which is now predicted to raise rates 7 times in 2018 as it is fighting rising inflation. The most widely used S&P 500 index (.SPX) has dropped 5.5 percentage year-to date, while the tech-driven Nasdaq (.IXIC) also has dropped 9.3 percent..



The fear that an aggressive current tightening in the central banking system going forward could stifle risksy assets has made difficult for some traders to maintain their positive view on bitcoin as well as other cryptos. make money not friends jacket has already been is characterized by high volatility.








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Bitcoin has "really become the most powerful investment that is gaining momentum and has so many risks that can create a 40% drop seemingly out of thin air," said Ed Moya as the senior analyst of Oanda.



There are a few analysts from looking to determine whether the currency is worth its value or identify potential price levels.




Analysts at JPMorgan believe that bitcoin's worth at $38,000 . That's about 15% less than its current price , based upon its volatile nature in comparison to that of gold, a different asset commonly used by investors to hedge their portfolios against rising inflation and economic uncertainty.



Vanda Research, meanwhile, said in a recent note that the majority of negative bets on the weaker bitcoin price were taken at around $47,000 "there could be a large short-squeeze should the threshold is reached and retail investors are reintroduced to trading with crypto."



As for the other side, correlations between the bitcoin and the S&P 500 climbed to an all-time high in January 31according to figures at BofA Global Research, undercutting some of the arguments made by those hoping that they can use the cryptocurrency to an investment to protect against market volatility.



Investors next week can look forward to minutes from the Federal Reserve's most recent meeting on monetary policy to be sent out on Wednesday. Walmart (WMT.N) along with chipmaker Nvidia Corp (NVDA.O) will be among the companies that will release numbers as corporate earnings season kicks off.



A few investors are getting ready to weather the volatility of bitcoin, assuming that the potential long-term investment for blockchain tech, the built-in supply limit and the network effects the technology creates will continue to last despite frequent price swings.



Jurrien Timmer director of global macro at Fidelity, likened the current speculation in cryptocurrencies to the volatility experienced by tech stocks during the dotcom boom nearly two decades ago. boom and bust cycle that left an extremely small number of businesses left standing.



"Amazon is still active and Apple is also around, and they're bigger than they've ever been and the thinking is that for bitcoin, it'll do much the same" says the expert. "But bitcoin isn't immune from these waves of speculation or sentiment."



Bitcoin could hit $100 million by 2023. Timmer told me, according to his supply/demand model.



Other experts believe that mature cryptocurrency, such as bitcoin and ether aren't likely to be able to offer the same stunning gains they have achieved since their founding.



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




The most popular altcoins are cosmos Terra Luna, and Polkadot which are down 20.5 percent (38%), 20.5%, and 25.5 percent from the beginning of the year, respectively, according to coinmarketcap.com.



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



Cryptocurrencies "are likely to remain extremely volatile going forward, but there are significant players on both the institutional and retail side who are growing, so interest is growing," said Oanda's Moya.




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