Notes

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


Investors are waiting for more swings in bitcoin as well as other cryptocurrencies, amid concerns that an overly hawkish Federal Reserve threaten to squelch market risk appetite.



The typical volatility associated with cryptocurrency is prominent in recent weeks. Bitcoin is the biggest cryptocurrency, has risen by about 33% from Jan. 24. The price was last seen at $43,850. It's rebounding from the plunge that cut its cost by half from November's record highest. The main competitor, ether , is up around 45% since Jan. 24 at around $3,200 with a 58 percent plunge from its record-setting $4,868 during November.








The proponents of cryptocurrency previously declared that they were not linked to other assets Bitcoin and its counterparts witnessed huge gains over past two years, rising like stocks when the Fed as well as other central banks infused unprecedented levels of stimulus into the global economy. Bitcoin has risen 1,039 percent since March 2019, and Ethereum has surged by 2940%. But the rising prices of both cryptocurrencies have been interrupted by numerous-stomach churning selloffs.








Their recent volatility comes amid a wider market selling spurred by investors updating their portfolios to make room for the more aggressive Fed which is expecting to raise rates up to seven times in 2018 as it battles rising inflation. The index that is the benchmark S&P 500 index (.SPX) has dropped 5.5 percent over the past year, and the technologically-oriented Nasdaq (.IXIC) dropped 9.3%. dropped 9.3%.



Concerns that an aggressive inflationary cycle by central banks moving further will hit risksy assets has made difficult for traders to maintain their positive view for bitcoin and cryptos as an asset class recognized as having a high degree of volatility.








As tensions escalate in Ukraine, where Washington warned that a Russian attack could start any minute, could result in market swings, investors said. learn more




Bitcoin is "really become the ultimate momentum trade and there are so many risk factors that could lead to a 40% drop out of nowhere," said Ed Moya of Oanda, a senior analyst. Oanda.



The volatility of Bitcoin's currency hasn't stopped analysts from attempting to estimate the true value of the currency or even identify important prices.




Analysts at JPMorgan believe that bitcoin's price at around $38,000 , which is about 15% less than its present price - based on its relative volatility to that of gold. Gold is a second asset used by investors to hedge their portfolios against market volatility and inflation.



Vanda Research, meanwhile, said in a recent note that the bulk of bearish bets made on a less bitcoin value were put in at approximately $47,000 "there could be a huge short-squeeze if this threshold is met, and retail investors return to trading in crypto."



Additionally, the correlations between bitcoin and the S&P500 rose to an all-time high on Jan 31, according the data provided by BofA Global Research, undercutting the logic of those hoping for the use of cryptocurrency as an insurance against market volatility.



Investors next week are expecting minutes from the Federal Reserve's most recent financial policy meeting due out on Wednesday. royal q robot crypto (WMT.N) and chip maker Nvidia Corp (NVDA.O) will be among the companies reporting resultsas the corporate earnings season gets underway.



Some investors are planning to ride out the volatility of bitcoin, hoping that the longer-term value in blockchain technology its built-in supply limit as well as the network effect it creates, will continue regardless of the numerous price swings.



Jurrien Timmer director of global macro at Fidelity and Fidelity, compared the current speculation on cryptocurrency to volatile tech stocks that were experiencing during the dotcom era nearly two decades ago, a boom-and-bust period that saw the smallest number of firms left standing.



"Amazon is still active and Apple is also around, and they're stronger than ever and the assumption is that for bitcoin that will be as well," his statement reads. "But bitcoin isn't immune from those waves of speculation and sentiment."



Bitcoin could reach $100,000 by 2023, Timmer is claiming, Based on his supply-demand models.



Some believe that mature cryptocurrency like the bitcoin and ether won't be able to be able to offer the same incredible gains that they have had since their inception.



Instead, they're turning at the universe of brand new, alternative coins that are designed to take advantage of the investment flowing into the crypto-currency space, including the metaverse and NFTs, which accounted for more than $30 billion of venture capital investments this year, as per PitchBook.



Certain altcoins include cosmos Terra Luna, and Polkadot that are down 20.5% 3, 38 and 25.5 percent over the past year, respectively at the time of coinmarketcap.com.



Understanding the risks linked to the decentralized financial system and its risks is likely to be among the main challenges for investors in 2022, according to Lily Francus, director of quantitative research strategy at Moody's Analytics.



Cryptocurrencies "are going to remain very unstable going forward, however, there are significant players both on the institutional and retail side that are growing, therefore the interest is growing," said Oanda's Moya.




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