After the publication last Friday of the United States’ inflation for May that showed a new record in 40 years, world markets -including cryptocurrencies- collapsed today due to fears of a tightening of interest rate rises in United States by the Federal Reserve (FED) and a recession. Among the cryptocurrencies, during the last weekend there was a capital outflow of more than $200 billion.
Despite being considered “a haven of value”, cryptocurrencies have not escaped the problems that affect the rest of the economy and finance. “Crypto is at the Fed’s mercy along with the Nasdaq and other risky assets.”Antoni Trenchef, co-founder of the cryptocurrency lender Nexo, told the Bloomberg agency.
Trenchef even pointed out that the level of “fear” is such that bitcoin forecasts are heard in the market that place it “in a single digit of thousands.”
The Federal Reserve, which increased its benchmark interest rate by 0.25% in March and 0.50% last month, placing it in a range of 0.75% to 1%, is set to announce a new hike this week. semicircular.
After the latest inflation data from the United States, which marked an annual 8.6% -a new peak after decelerating to 8.3% in April- the market fears that the FED will continue with its string of 50-point hikes and even does not rule out a of 75 points.
Said rises have repercussions on higher-risk assets such as shares -especially technology ones- as Treasury bonds become more attractive, in addition to generating a drop in profits (due to the decrease in consumption) in companies that are listed on the indices.
But in cryptocurrencies, the problems in its ecosystem are added, including, last May, a run on the Terra stablecoin that caused a contagion effect and a loss of confidence in all digital currencies in general.
Today, the fear produced by the stoppage of withdrawals and transfers arranged -because of “extreme market conditions”- by Celsius Network, a cryptocurrency lender, whose sustainability of its returns came into question in the last few days, was added. weeks.
Like Terra, which promised an interest rate of up to 20%, the Celsius token promised returns of up to 30% per week in exchange for depositing cryptocurrencies on its platform, which houses 1.7 million customers.
“The Celsius news adds more fuel to the fire in terms of uncertainty in the market,” said Vijay Ayyar, vice president of cryptocurrency platform Luno.
By 2021, the fledgling sector had attracted more and more players from traditional finance, whose risk appetite was fueled by loose policies from central banks around the world, the AFP news agency noted. But the rate hike by the US Federal Reserve (Fed), in its attempt to combat runaway inflation, is weighing on markets.
“We are in a market”weak, sad, beaten, bloody, boring, painful and other depressing adjectives“said Wealth Mastery analyst Lark Davis.
“Every mini rally is met with a sharp and brutal drop,” the expert recounted. “Altcoins continue to bleed and bitcoin dominance continues to increase,” he continues, adding that “these times in the markets absolutely tear traders apart.”
By technical analysis, “After a few weeks of consolidation, the falls return and this Monday pulverizes the support of US $ 26,565“, commented César Nuez, an analyst at Bolsamanía.
“This further complicates their price series and it almost certainly looks like we could end up seeing an extension of the declines to the $19,980 level,” the expert said.
“This gives you a 20% drop margin from current prices. The first resistance level is at $32,430. We will not see a technical improvement as long as it continues to trade below this price level,” concludes Nuez.
rating agency Scope warned that: “when it comes to cryptocurrencies, the fear is that the lack of regulation and supervision of crypto assets can gradually flow into traditional financial markets, contaminating them with new risks. In fact, more and more market participants are jumping on the bandwagon of bitcoin and ether, which account for 40% and 20%, respectively, of the aggregate cryptocurrency market capitalization,” the agency said.
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Source: Ambito
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