Bitcoin fell below $43,000 following U.S. stocks lower
Recently, bitcoin has seen a continuous decline, since March 29, the breakthrough of $48,000, has been in a declining state, especially in the past three days, bitcoin is showing a significant downward trend. Although today's market has rebounded, but the rebound strength is obviously weak, the overall market is in the low shock.
At the same time, cryptocurrency almost as a whole fell, with many tokens falling to varying degrees. ETH fell from $3,579 to as low as $3,143.
As of this writing, bitcoin has fallen as low as $42,726 and is currently trading at $43,522.
Affected by the downward trend, investors worry more, the market sentiment index fell to 37, the market is in a panic state.
The fall in cryptocurrencies has a strong correlation with U.S. stocks.
Empty the day before yesterday, the s&p 500 jumped down, followed closely by the currency, also showed a sharp sell-off, once again proved that the currency and the relevance of U.S. stocks, and the main reasons for this phenomenon, lies in the institutional investors of a large number of admission, makes money held at the same time, U.S. stocks and encryption when U.S. stocks appear larger fluctuation, tend to affect the operation of the currency, Thus forming a strong market correlation.
This is the main reason for the sudden drop in bitcoin when the market is not clearly bearish.
So, how will the market respond to the recent increase in interest rates by the Federal Reserve and the prospect of asset reduction?
Interest rate hikes, cuts, us dividends are good encryption good?
Money market traders are betting the Fed will raise interest rates by 225 basis points before the end of the year, according to Gold 10. That would mean a cumulative increase of 2.5 percentage points for the year, including increases already implemented in March.
The Fed has not raised rates this much in a single year since 1994; 1994 was famously a brutal year for bond investors, including a 75 basis point rise in interest rates.
With six more meetings scheduled this year, assuming the Fed raises rates at each meeting, current market expectations would equate to three 50 basis point hikes and three 25 basis point hikes. That would raise the top end of the range to 2.75 per cent, the highest level since the 2008 financial crisis.
The market is betting that the Federal Reserve will raise interest rates by 250 basis points in 2022, the tightening will be the largest in nearly 30 years, which will greatly benefit the US stock market. This is also the main reason for the sharp rise of the US stock market after the landing of the interest rate hike in March. The coming reduction will further expand the US dividend, and the market will continue to appear two big rising momentum
Fed officials discussed how to reduce their bond holdings by trillions of dollars at their March meeting, with a consensus of about $95 billion, according to Fed minutes. Officials "generally agreed" to allow the phasing out of $60 billion in Treasury securities and $35 billion in mortgage-backed securities over three months, and while officials did not take any formal votes, the minutes showed that members agreed that the process could begin in May.
A series of good us dividend policies will bring strong growth potential to the stock market. Then, can we get a new bull market growth engine by virtue of the correlation between cryptocurrency and US stocks?
Jack Farley, macro analyst and host of the Blockworks Forward Guidance podcast, said, "I don't see the idea that fed balance sheet reduction is necessarily bad for cryptocurrencies. The Fed's most recent quantitative tightening began in October 2017, and bitcoin rose 340% since then until peaking in December 2017."
Therefore, to a certain extent, the Federal Reserve's interest rate hike and tapering behavior may bring a certain positive trend for cryptocurrency.
When will the cryptocurrency bull market arrive?
Despite the strong correlation between cryptocurrencies and THE U.S. stock market over the past two years, we still see a significant divergence in market movements:
Recent developments have shown that when U.S. stocks fall, cryptocurrencies tend to follow with varying degrees of decline, but the recent rise in U.S. stocks does not necessarily lead to cryptocurrency gains.
In addition to correlation, there is more time complementarity between US stocks and cryptocurrencies!
This is the main reason why institutional investors have moved into cryptocurrencies in large numbers: to seek new asset growth support in the face of the U.S. stock market's setback.
Speaking at the bitcoin 2022 conference, NFL star quarterback Aaron Rodgers said, "The Fed keeps printing trillions of dollars, and I think the best defense against inflation is bitcoin."
To some extent, cryptocurrencies like Bitcoin are actually one of the safe-haven assets distinct from U.S. stocks.
As a result, the rally in U.S. stocks under the signal of interest rate hikes and tapering may not always drive the cryptocurrency rally, but may to some extent restrain the development of the cryptocurrency market.
In the short term, under the macro background of the Federal Reserve starting to raise interest rates and accelerate the reduction of the balance sheet, the market generally believes that the prospect of risk assets such as bitcoin is not optimistic.
Although the Russia-Ukraine conflict has brought unprecedented opportunities for the development of cryptocurrency, and the adoption rate and value of bitcoin have achieved great growth, it is difficult for the market to enter the deep bear trough like the previous bear market cycles, but the bull market growth is difficult to achieve.
According to Cointelegraph, veteran trader Peter Brandt suggested in a tweet that bitcoin will likely have to wait until 2024 to start a new "crazy bull market."
According to Peter Brandt, bitcoin's next mad cow may not happen until May 2024, which is almost as fast as the next bitcoin halving.
In the past two halving periods, bitcoin has risen tenfold or more, and the cryptocurrency takes an average of 33 months to start a bull market.
If history repeats itself, he explains, the next bull market will start in May 2024. Some market participants have grown accustomed to bitcoin's price highs every four years, focusing in particular on the year after each halving. In May 2020, bitcoin halved for the third time since its birth and rose 59.7% in 2021.
Although this view is still in the currency in half, and the encryption bull market cycle as the foundation, but in the current, there are still many in place, especially the macroeconomic in raising interest rates cut under the stimulus of restoration, the currency's safe-haven narrative story it difficult to continue, will also break new bull market expectations, in order to delay the arrival of the bull market.
