Notes

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


Investors are waiting for more variations in bitcoin, and other digital currencies, as concerns about an overly aggressive Federal Reserve threaten to squelch market appetite for risk in all markets.



The volatility typically associated with cryptocurrency has been fully displayed in recent weeks. Bitcoin is the most popular cryptocurrency, has risen by 33% in the past month since Jan. 24 and has recently traded at $43,850. It has recovered from an ebb that cut its price by half from its record-setting highest. The primary competitor, ether , is up about 45percent from Jan. 24 with a price of around $3200 with a 58 percent decline from its record-setting $4,868 during November.








The advocates of cryptocurrency have previously boasted of their lack of a correlation to other assets, bitcoin and its peers were able to make huge gains during the last two years, rallying in tandem with stocks as Fed together with the other major central banks have pumped massive amounts of stimulus into the global economy. does cookie swirl c make money is up 1,039% since March 2020 and Ether has gained 2,940%. However, the surges in both cryptocurrency have stopped by several stomach churning selling.








Their recent volatility comes amid a wider price decline driven by investors updating their portfolios to make room for a more aggressive Fed which is expected to raise rates nearly seven times this year as it is fighting rising inflation. The index that is the benchmark S&P 500 index (.SPX) has dropped 5.5 percent in the year to date, while the high-tech Nasdaq (.IXIC) also has lost 9.3%.



Fears that a ferocious pace of tightening by the central bank moving forward will be a savage blow to high-risk assets has made it difficult for traders to maintain their optimistic view regarding bitcoin and other digital currencies An asset class already known for its extreme volatility.








Rising tensions in Ukraine that are escalating in Ukraine, where Washington warned that a Russian invasion could occur any minute, could cause market volatility as investors speculated. find out more



Bitcoin will "really become the most powerful movement trade," and there are numerous risks that could cause a 40% loss without warning," said Ed Moya an analyst at Oanda.



The volatility of Bitcoin doesn't stop some analysts from trying to gauge the market's value, or identify possible price points.




Analysts at JPMorgan believe that bitcoin's price at around $38,000 which is around 15% lower than its current price based primarily on its variation in relation to that for gold, another investment commonly used by investors to hedge their portfolios against volatility in the economy and inflation.



Vanda Research, meanwhile, released a statement that most of the bets that were speculative on a lower bitcoin price were entered at around $47,000, and "there could be a major short squeeze if the threshold is crossed and retail investors return for crypto-trading."



In addition, the correlations between bitcoin and the S&P500 hit an all-time high on Jan 31, according data that came from BofA Global Research, undercutting any argument that people might make to utilize bitcoin as an instrument to hedge against market volatility.



Investors this week will get minutes of the Fed's last meeting on monetary policy due out on Wednesday. Walmart (WMT.N) along with chipmaker Nvidia Corp (NVDA.O) will be among the companies that report numbers as corporate earnings season gets underway.



Certain investors are bracing themselves to take advantage of the volatility of bitcoin, assuming that the potential long-term investment of blockchain technology, its built in supply limit, and the effects it produces, will endure despite the frequent price fluctuations.



Jurrien Timmer, director of global macro at Fidelity The Fidelity director compared the present speculation in cryptocurrencies to the fluctuations in tech stocks seen during the dotcom period more than two decades ago. This was a boom-and-bust period that saw just a handful of companies surviving.



"Amazon is still active and Apple is still around , and they're more powerful than ever, and the idea is that with bitcoin that will be much the same" says the expert. "But make money mining crypto 's not immune to those waves of speculation and sentiment."



Bitcoin could hit $100 million by 2023, Timmer claims, as per his supply/demand calculations.




Other experts believe that mature cryptocurrency, such as bitcoin and ether have a low chance to provide the eye-watering gains they have notched since their inception.



Instead, they're looking towards the vast universe of new, alternative coins that are developing to take advantage of the money flowing into the crypto-currency space such as the metaverse and NFTs, which accounted for 30 billion dollars worth of venture capital investments in the last year, according to PitchBook.



There are a few altcoins like cosmos, Terra Luna, and Polkadot and Polkadot, which are down about 20.5 percent 35.8%, 38.8% and 25.5 percentages year-todate, respectively, as per coinmarketcap.com.



Understanding the risks associated with the decentralized financial system and its risks is going to be one of the main concerns for investors by 2022, said Lily Francus, director of quantitative research strategy at Moody's Analytics.



Cryptocurrencies "are likely to remain extremely volatile for the foreseeable future, but there are significant players both on the institutional and retail side that are still growing, meaning that interest continues to grow," said Oanda's Moya.




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