Notes

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


Investors are ready for further excitement in bitcoin and the other cryptocurrency markets, as fears about an aggressive Federal Reserve threaten to squelch the risk-taking appetite in markets.



The usual volatility associated with cryptocurrency has been visible in recent weeks. Bitcoin is the most popular cryptocurrency, is up approximately 33% since Jan. 24 and recently traded at $43,850. This is a rebound from an ebb that cut its prices in half compared to November's record-setting peak. make money taking surveys , Ether, is climbing around 45percent since Jan. 24 with a price of around $3200 after a nearly 56 percent decline from its record high of $4,868, also in November.








Even though advocates of cryptocurrencies declared that they were not linked to other assets the bitcoin market and its competitors had huge gains over the last two years. They have risen and gaining momentum alongside stocks as Fed and central banks released extraordinary levels of stimulus into the global economy. Bitcoin has risen 1,039 percent since March 2019, and Ether has gained 2,940%, but the growth in both cryptos have been disrupted by stomach-churning selloffs.








The recent volatility in the market is a result of a larger market selloff driven by investors updating their portfolios to make room for an increasingly aggressive Fed which is expected to raise rates nearly seven times in the coming year as it battles rising inflation. The standard S&P 500 index (.SPX) has dropped 5.5% year-to-date, while the tech-driven Nasdaq (.IXIC) have lost 9.3 percent..



Insecurity that a rapid central bank tightening cycle going forward could stifle risksy assets has made difficult for some traders to keep their optimistic view on bitcoin and other cryptos An asset class already is characterized by high volatility.








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Bitcoin can "really become the most powerful investment that is gaining momentum and has so many risk factors that could cause a 40% plunge that appears out of thin air," said Ed Moya as the senior analyst of Oanda.



Bitcoin's volatility hasn't stopped some analysts from trying to determine the true value of the currency or identify potential price points.



Analysts at JPMorgan believe that bitcoin's worth at $38,000 , which is about 15% lower than its most recent price based primarily on its relative volatility to that for gold, another investment used by investors to protect their portfolios from rising inflation and economic uncertainty.



Vanda Research, meanwhile, revealed in a new note that the majority of bearish bets made on a less bitcoin value were put in at around $47,000, and "there could be a major short-squeeze should the threshold is exceeded, and retail investors return into crypto-trading."



As for the other side, correlations between the bitcoin and the S&P 500 reached an all-time record on January 31st, as per data of BofA Global Research, undercutting the case for those hoping to take advantage of the cryptocurrency as the hedge against market volatility.



Investors can look forward to minutes from the Fed's most recent financial policy meeting due out on Wednesday. Walmart (WMT.N) as well as chip maker Nvidia Corp (NVDA.O) will figure among those releasing numbers as corporate earnings season begins.



Some investors are planning to ride out the volatility of bitcoin, believing that the longer-term value Blockchain technology the built in supply limit, as well as the network effect it creates, will last despite frequent price swings.



Jurrien Timmer, director of global macro at Fidelity explained that the current speculation about cryptocurrency to the turmoil experienced by tech stocks in the dotcom boom nearly two decades ago, a boom and bust cycle that left relatively few companies remaining.



"Amazon is still around , and Apple remains around and they're stronger than ever and the thinking is that for bitcoin it's going to be as well," explained the man. "But it's not immune to those waves of speculation and sentiment."



Bitcoin could hit 100,000 by 2023, Timmer told me, basing his supply/demand models.



Others think that mature cryptocurrency such as bitcoin and ether aren't going to deliver the kind of impressive gains that they have racked up since their creation.



Instead, they're looking to the universe of new, alternative coins that are being created to take advantage of the money flooding into the crypto-currency space such as the metaverse and NFTs which saw $3 billion in venture capital investment this year, as per PitchBook.




There are altcoins that include cosmos Terra Luna, and Polkadot and are trading at around 20.5% 38%, 20.5% and 25.5 percentages year-todate, respectively, according to coinmarketcap.com.



Understanding the risks linked to their decentralized nature and financial systems is going to be one of the most significant challenges for investors in 2022. Lily Francus, director of quantitative research strategy at Moody's Analytics.



Cryptocurrencies "are going to be extremely unstable in the future, but there are significant players on both the institutional side and the retail side that are growing, therefore the interest is still growing," said Oanda's Moya.





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