Today, the capital market is a bleak, severe setback, have a relatively large decline:
U.S. stocks fell across the board, with the Nasdaq down 2.5%, the Dow Jones Industrial Average down 2.27% and the S&P 500 down 2.46%.
Brent and WTI both lost 2% on the day;
A-shares opened with the Shanghai Composite index down 1.71%, the Shenzhen Component Index down 1.91%, and the Shenzhen Blockchain 50 index down 1.9%. The blockchain sector opened down 1.81%, while the digital currency sector opened down 2.5%.
Cryptocurrencies fell as traditional financial markets fell across the board: BTC fell to a low of $38,678, a one-week low; ETH fell to a low of $2,841, below the lowest price on March 22; Other cryptocurrencies have all hit lows to varying degrees, with only six of the top 100 listed by market capitalization up slightly by the end of this year, while the remaining 94 have all fallen.
Affected by the overall decline in the market, the market panic intensified, according to the data, bitcoin market sentiment index fell to 24, the state of extreme panic.
What's more, the cryptocurrency market's decline may just be the beginning of a bigger crisis engulfing the market:
The first is the Federal Reserve interest rate reduction and other monetary policies, is becoming an important cause of market volatility.
Zhu Guangyao, adviser to CWM50 and former vice minister of Finance of China, said at the 2022 Asset Management Summit held by the China Wealth Management 50 Forum that the us monetary policy adjustment is stronger and faster than in the past.
He said he expects the Fed to raise interest rates several times this year, particularly by 50 basis points at its next meeting next month. There is also the possibility of simultaneous shrinking of the balance sheet. Whether the Fed will keep raising rates next year depends largely on whether its inflation rate of 8.5 per cent can fall more quickly.
Raoul Pal, a former Goldman Sachs hedge fund manager and CEO of Real Vision, said a potential stock market decline could threaten cryptocurrency price movements in the coming months.
Pal said he is watching the Nasdaq, adding that from a technical analysis point of view, if it fails to hold key support, the index could continue to move lower, leaving stocks at risk of a significant downside.
The current macro picture suggests a major correction is coming that could drag down digital assets, though not cause them to hit new lows.
He also said that if cryptocurrencies eventually enter a correction phase, he thinks there will be more noise in the overall market.
There is a strong downside forecast in the stock market, so cryptocurrencies are also exposed to a significant downside risk.
Secondly, retail interest in the cryptocurrency market has apparently faded, and the market may be turning into a deep bear market, with cryptocurrency facing greater risk of falling to the bottom.
The price of bitcoin soared to as high as $69,000 last year and is in the $40,000 range this year, according to Google Trends search data, but has failed to attract sustained interest from people in the retail market.
As of April 22, 2022, global searches for bitcoin had reached mid-2020 levels of 17 for the week of April 17 to April 23, down from 76 in May 2021.
According to the data, most searches for bitcoin come from Nigeria, followed by El Salvador and Austria. The numbers are relative, meaning nigerians search for bitcoin more than other terms, but not necessarily more than the overall number of searches in places like the United States. But despite the apparent waning of interest in Bitcoin, some analysts say the retail crowd is being attracted to new areas and markets within the crypto space, such as DeFi tokens or blockchains like Solana and Avalanche.
So far, however, institutional behavior has not fluctuated, and buying and holding cryptocurrencies remains an important strategy for many institutions.
Anthony Scaramucci, founder of Skybridge Capital, said in an interview with Bloomberg that nearly half of Skybridge's $3.5 billion under management is tied to crypto assets, including Bitcoin, Algorand ethereum and publicly traded crypto related stocks.
As a result, the current market, even in a bear market, is very different from the past, and prices at the bottom could rise as a result.
Third, the weak performance of Ethereum and options could signal further downside for the market.
According to CoinDesk, the downturn in the ethereum spot market has led traders to focus on derivatives, with some finding options cheaper in this low-implied volatility environment.
According to data provided by Skew, the explosive growth of undirected price action and decentralized financial option vaults pushed ethereum's three-month daily implied volatility (IV), or price volatility expectations, to 3.5%, the lowest since November 2020.
Despite the intensification of the downside crisis, the heat in emerging markets, including NFT, may provide the market with a degree of heat and activity that will keep the market somewhat out of the wider abyss.
Therefore, from the overall performance of the cryptocurrency market, short-term bearish view is the prevailing view, but there is still a certain long-term bullish trend.
Paul Kim, chief executive of Simplify Asset Management, an ETF that specializes in options-based investment strategies for advisers, said in an interview that investors should be "cautiously optimistic" about cryptocurrencies for all geopolitical and macro reasons and that he doesn't personally invest much in them.
But As Paul Kim notes, "If people invest their time, resources, and careers into building an industry or market, then in fact it is an important industry or market... Given all the geopolitical and macro reasons why things like Bitcoin and cryptocurrencies are important, I think this is a call option on something that could become very big. "