bitcoin price Crypto rose 0.4% to $20,910 after recovering somewhat from a $1,000 drop after the co-founder of a crypto exchange was arrested on Wednesday, and weak US data pointed to an economic hard landing.
although there was Good news on wholesale inflation in the US yesterdayThe shocking retail sales data reminded market participants that the recession is coming, if not already here.
Combined with weak factory output data, a week of shutdown sees US manufacturing
Slow growth is bad for stocks — and it’s rubbed off on crypto today. The S&P 500 is trading down 1% at 3,889 and the Nasdaq is down 1.08% at 10,836.
Bitcoin price is likely to break free from the current resistance area by moving above $22,500
bitcoin and all crypto assets They have been highly correlated to other riskier assets like stocks over the past 12 months, so what happens in equities tends to spill over to crypto.
The Bellwether crypto asset is currently battling in the area of resistance it can break free from around $22,500 (see chart below).
Next up is the $30k area, then an even stronger area of resistance between $34.7k and $48.8k.
But we may be ahead of ourselves, as it is still unclear whether the bitcoin rally is actually over.
For now, however, bitcoin price is above the 200-day moving average for the first time since December 2021, after briefly touching the MA200 in March last year.
Genesis Bankruptcy Fears, Debt-Limiting Drama, ECB Talks Tougher On Rates – Adds Uncertainty To Crypto
As if all this was not enough for the market to worry about, yesterday brought news of crypto lender Genesis was preparing for bankruptcy And Digital Currency Group, its owner, was suspending its dividend.
Then today the US debt ceiling was hit, forcing the Treasury to use so-called special measures to avoid default.
Elsewhere, the European Central Bank (ECB) indicated that it will hold off on raising interest rates regardless of what the Fed does, further knocking down crypto prices, has stalled.
ECB President Christine Lagardeindicated that the eurozone’s central bank would continue to hike, even as there are signs of a softening of inflation across the bloc.
This comes after it came to the fore at the December ECB Governing Council meeting about stubborn underlying inflationary pressures.
So even if the Fed starts easing rates, it won’t happen in Europe.
High interest rates hurt growth stock sectors like tech because it eats into future earnings, driving down valuations. Crypto, for whatever reason, behaves like a high-risk tech stock.
DOJ raid is good for combating crime but the announcement was a complete drama
Add to this the anti-money laundering enforcement action taken by the US Department of Justice yesterday and it is easy to see why crypto market sentiment took a turn for the worse yesterday.
DOJ arrests Anatoly Legkodimov, co-founder of BitzLato exchangeOn suspicion of laundering illegal gambling and drug money.
Nice to see DOJ in action but felt the need to make a show after falling asleep on FTX and talking to US officials
Despite all these headwinds, the near-term outlook for crypto is perhaps such that the stalled rally could quickly take off again.
While a hard landing is expected for the US and other advanced economies, the recession is likely to result in the Fed providing more leeway on interest rates.
In fact, concerns about the Fed possibly overdoing on rates are seeing the beginning of a split over the FOMC rate-setting body.
There could be a significant shift in market sentiment across all asset classes
Markus Sotirou, market analyst at publicly listed digital asset broker GlobalBlock (TSXV:BLOK), believes there could be a significant shift in market sentiment: “This reaction from global markets may suggest that investors Fears a recession, because it’s bad news for the economy. Bad news for the markets headed.”
He added: “If this psychology persists, it will be a significant regime change, after persistent inflation was the primary driver for asset prices in 2022.”
But the DOJ has a bigger role in weakening bitcoin’s price than vice versa, which provides a strong argument for further more upside.
Bitcoin dropped $1,000 from $21,400 to $20,500 when the DOJ was first announced, but when the real news broke, it wasn’t as bad as the market feared.
In fact a gap is opening up between the US and Europe on crypto regulation and interest rates as well.
The US is catching up on crypto regulation. Other regions, such as Europe, are taking a more thoughtful and sober approach.
Europe, to some extent, got ahead of the curve with the establishment of the MiCA (Markets in Crypto Assets) regulatory framework, which is expected to be fully implemented next year or possibly sooner.
Sensible crypto regulation is coming to South Korea, Thailand, Germany… if not the US
Timo Lehse, co-founder of Swarm Markets, commented on the DOJ action, saying: “Announcing big enforcement actions on TV like they’ve caught the Dillinger Gang may make for good politics, but it’s not particularly productive.” Not approach.
“Other regulators like Baffin in Germany Take a more lean approach to regulating this sector and don’t be too keen on boastful ‘convinced’ press conferences.
He continued: “By all accounts bitzlato Crypto is small fry in the bigger scheme of things and the DoJ has failed to act on several major scams over the past year.
“Cracking down on illegal activity is to be commended, but it is not going to be how crypto becomes a normal part of the financial ecosystem.
“This will come with a measured regulatory framework and positive working relationships between regulators and crypto market innovators.”
In South Korea, regulators also showed signs of getting to grips with crypto regulation in a more thoughtful and sensible fashion than the mess of America’s competing regulatory agencies.
GlobalBlock’s Sotiriou noted: “Thailand’s SEC, for example, released new regulations on custodial cryptocurrencies this week… In addition, South KoreaThe U.S. financial regulator is now developing tools that could allow crypto risks to be monitored.”
Time to start accumulating a diversified portfolio of crypto assets
you must be thinking buy bitcoin As part of dollar cost averaging strategy but don’t forget the small caps. Like equities, the risk-reward profile is best in these less-researched areas of the market, especially pre-sales.
Sustainable play-to-earn game platform meta masters guild There is one such coin and it has raised almost $700,000 in its barely week old presale.
have another to fight, which is using Web3 technology to transform fitness apps and gym workouts. It has raised $3 million and its app will be live by Q2 this year and it plans to fit a network of 20 gyms to help elite combat sports athletes.
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