Notes

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


Investors are anticipating further variations in bitcoin, and other cryptocurrencies, as worries over an overly aggressive Federal Reserve threaten to squelch the appetite for risk across markets.




The volatility normally associated with cryptocurrencies has been displayed over the past few weeks. Bitcoin is the biggest cryptocurrency, has been up around 33% since Jan. 24. It was last traded at $43,850, bouncing back from it's plunge, which cut its prices in half compared to November's record peak. Its biggest rival, ether , is up about 40% since Jan. 24, at about $3,200 after a 56% nosedive from its record-setting $4,868 as of November.








Even though advocates of cryptocurrencies denied their correlation to other assets bitcoin and its peers saw huge gains over the last two years, rallying like stocks when the Fed in addition to other central bankers pumped unprecedented levels of stimulus into the world economy. Bitcoin is up 1,039 percent from March 2020. the ether price has increased 2,940%, though the rallies in both cryptocurrencies have been slowed by frequent stomach churning selling.








Their recent volatility is a result of a larger downturn in the market, triggered by people refining their portfolios to prepare for the more aggressive Fed, which is now expecting to raise rates as high as seven times in the coming year as it fights rising inflation. 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) also has lost 9.3 percent..



An edgy policy of central banks tightening moving ahead will weaken volatile assets has made difficult for traders to maintain their positive outlook regarding bitcoin and various cryptos this asset class is already marked by its high volatility.








A rise in tensions within Ukraine which is where Washington warned that a Russian invasion could occur at any moment, could lead to market shifts in the future Investors said. find out more



Bitcoin can "really become the ultimate the market that has momentum, and there's plenty of risks that could trigger a 40% drop suddenly," said Ed Moya the senior analyst at Oanda.



The volatility of Bitcoin hasn't stopped analysts from attempting to estimate what the price of Bitcoin is or to identify potentially significant prices.




Analysts at JPMorgan estimate bitcoin's current fair value at around $38,000 . That's about 15% below its recent price based primarily on its volatile nature in comparison to that of gold, an alternative asset commonly used by investors to hedge their portfolios against fluctuations in the economy and inflation.



Vanda Research, meanwhile, stated in a recent report that the bulk of negative bets on the weaker bitcoin price were placed around $47,000 "there could be a major short-squeeze should the threshold is met and retail investors are reintroduced back to crypto-trading."



The correlations between bitcoin and the S&P500 reached an all-time high in January 31, according to data taken from BofA Global Research, undercutting the claims of those who plan for the use of cryptocurrency as an investment to protect against market volatility.



The next week, investors will receive minutes from the most recent Federal Reserve annual meeting of its monetary policy committee, due to be released on Wednesday. Walmart (WMT.N) in addition to chipmaker Nvidia Corp (NVDA.O) will be among the companies to announce resultsas the corporate earnings season begins.



A few investors are getting ready to take on the volatility in bitcoin, believing on the long-term viability from blockchain technology the built-in supply limit and the network effects its technology produces, will last despite the constant price swings.



Jurrien Timmer director of macro-economics at Fidelity has compared the current crypto market's volatility to the volatility experienced by tech stocks during the dotcom period more than two decades ago, a boom-and -bust time period that saw an incredibly small percentage of companies surviving.



"Amazon remains in business and Apple is also around, and they're stronger than ever and the idea is that with bitcoin, it will be as well," Mr. Smith said. "But bitcoin isn't immune to the waves of speculation and sentiment."



Bitcoin could reach $100,000 as soon as 2023. Timmer has said, in accordance with his supply/demand models.



Some believe that mature cryptocurrency like Bitcoin and Ether are unlikely to provide the astonishing gains that they have enjoyed since their beginning.



Instead, they're turning at the possibilities of new alternative coins being developed to make use of the wealth flowing into the crypto sector, including the metaverse and NFTs. make money hand over fist meaning saw $30 billion worth of venture capital investments in 2017, according to PitchBook.



Certain altcoins include cosmos Terra Luna, and Polkadot and Polkadot, which are down about 20.5 percent, 38% and 25.5 percent from the beginning of the year, respectively, at the time of coinmarketcap.com.



Understanding the risks associated with them and decentralized financing is likely to be among principal challenges facing investors in 2022. Lily Francus, director of quantitative research strategy at Moody's Analytics.



Cryptocurrencies "are going to be extremely volatile in the coming years, but there are some significant players on both the institutional side and the retail side that are still expanding, so the market continues to grow," said Oanda's Moya.




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