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


Investors are anticipating further gyrations in bitcoin and other cryptocurrencies, while worries about the direction of the Federal Reserve threaten to squelch the market's appetite for risk.



The volatility that is typically that is characteristic of cryptocurrency has been all over the news during the last few weeks. Bitcoin , the largest cryptocurrency, is up approximately 33% since Jan. 24. how make money fast was last seen at $43,850. It's rebounding from the plunge that cut its price in half from November's record-setting peak. The major competitor, ether , has risen by around 40% since Jan. 24 at around $3,200 after a 56 percent drop from the record-setting $4,868 as of November.








The advocates of cryptocurrency have previously stated that they have no correlation to other assets as a result, bitcoin and its peer saw huge gains over the past two years. They've been rising like stocks when the Fed together with the other major central bankers pumped extraordinary levels of stimulus into the global economy. Bitcoin has increased by 1,039 percent since March 2020, and Ethereum has seen a rise of 2,940%, but the gains in both have been marred by numerous stomach churning sales.








The recent volatility in the market has been accompanied by a wider market selloff driven by investors shifting their portfolios around to account for an even more aggressive Fed which is likely to increase rates as high as seven times in 2018 as it combats a rising rate of inflation. royal q robot trading used S&P 500 index (.SPX) is down 5.5 percent in the year to date, while the tech-driven Nasdaq (.IXIC) is down 9.3%. dropped 9.3%.



Beliefs that a more aggressive government tightening of the pace going forward will be a savage blow to risksy assets has made difficult for traders to maintain their optimistic outlook on bitcoin as well as other cryptos An asset class already identified with intense volatility.








Intensifying tensions in Ukraine which is where Washington warned that a Russian invasion could occur anytime, may generate market-wide volatility analysts said. Learn more



Bitcoin has "really become the ultimate mover and several risks that could cause a 40% drop suddenly," said Ed Moya, senior analyst at Oanda.



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




Analysts at JPMorgan estimate bitcoin's current price at around 38,000 dollars, about 15% lower than its current price based primarily on its relative volatility to that of gold. Gold is an asset people often invest in to hedge their portfolios against price fluctuations and economic uncertainty.



Vanda Research, meanwhile, wrote in a report that most of the bearish bets placed on a weaker bitcoin price were placed at approximately $47,000 "there might be a massive short-squeeze should the threshold is met, and retail investors return to crypto-trading."



In addition, the correlations between bitcoin and the S&P500 reached an all-time high in January 31, according data obtained from BofA Global Research, undercutting the claims of those who plan to utilize the cryptocurrency as an instrument to hedge against market volatility.




Investors next week are expecting minutes of the Fed's latest meeting on monetary policy due out on Wednesday. Walmart (WMT.N) along with chip maker Nvidia Corp (NVDA.O) will be among the companies reporting resultsas the corporate earnings season rolls on.



Some investors are steeling themselves to ride out the volatility of bitcoin, hoping that the longer-term value that blockchain technologies offer, the built in supply limit, and the effect on networks it creates, will continue despite the constant price swings.



Jurrien Timmer, director of global macro at Fidelity described the current bitcoin speculation to the volatile tech stocks that were experiencing during the dotcom era over two decades ago. It was a boom and bust period that resulted in very few firms left standing.



"Amazon is still active and Apple is around as well and they're more powerful than ever, and the theory is that for bitcoin, it'll do similarly," He said. "But bitcoin isn't immune from the waves of speculation and sentiment."



Bitcoin could hit $100,000 by 2023, Timmer has said, basing his supply/demand models.



Others believe that mature cryptocurrencies such as bitcoin and ether have a low chance to provide the impressive gains that they have racked up since their founding.



Instead, they're looking to the vast world of alternative currencies that are in development to capitalize of the cash flowing into the crypto sector which includes the metaverse as well as NFTs. These coins saw 30 billion dollars worth of venture capital investment in the last year, according to PitchBook.



Some altcoins include cosmos, Terra Luna, and Polkadot which are down 20.5 percent (38%), 20.5%, and 25.5 percent for the year to date, respectively, in accordance with coinmarketcap.com.



Understanding the risks associated with the decentralized financial system and its risks is likely to be among the major challenges for investors by 2022, says Lily Francus, director of quantitative research strategy at Moody's Analytics.



Cryptocurrencies "are likely to remain extremely unstable in the future, but there are some significant players on both the institutional and retail side who are increasing, so interest is growing," said Oanda's Moya.




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