Analysts warn that a more “hawkish” Federal Reserve will affect risk assets and the distance with American assets will grow.
Thes cryptocurrencies They plummet up to 20% this Tuesday, June 18. Bitcoin gives up more than 2% and stands at US$65,000, Ethereum puts US$3,400 in danger while altcoins are the most affected of the day.
The biggest decline was recorded by Shiba Inu by up to 20.3%, followed by Avalanche (-19.3%), Bitcoin Cash (-15%) and Polygon (-13.8%).
Why cryptocurrencies are falling
According to venture capital firm Paradigm, lack of positive catalysts. “Despite positive predictions, a market needs real news to move forward and maintain traction,” these experts highlight.
The truth is that in recent days there have been no major developments but there has been a lot of expectation for the future. Most notably, the Securities and Exchange Commission (SEC) acknowledged that it could approve spot ETH exchange-traded funds (ETFs), although it has not given an indicative date. The IPO of these investment products is expected to generate a broad rebound in the marketalthough its effect could be smaller than that of BTC ETFs, given the modest size of ETH compared to BTC.
Another reason that is causing these setbacks has to do with the macroeconomic factors. Although the latest inflation data have been positive, the Federal Reserve (Fed) was more “hawkish” than expected and cut its forecast for interest rate cuts from three to one for the remainder of the year. Analysts consider that the Fed is being too conservative, although this has not prevented it from spreading certain feeling of risk aversion among investors.
bitcoin cryptocurrencies
Reuters
However, US equities have been doing much better in recent days than crypto assets. And it is that the S&P 500 and the Nasdaq have been renewing highs in recent daysdriven by technological values that continue to ride the wave of artificial intelligence (AI), which has led Nvidia and Apple to renew their all-time highs.
While it is true that the correlation between bitcoin and equities has increased significantly, it is also true that this link is still too “weak”. Or so says Javier Molina, senior market analyst at eToro, who believes this explains why traditional assets are rising while cryptocurrencies are losing strength.
What to expect for Bitcoin
Bitcoin is still stuck within $60,000 and is waiting for new signs of recovery. “We continue to see this decorrelation with the S&P 500 and the drop in volatility is important. We have to surpass 72,000 to strongly attack 73,000 and enter the price discovery zone. As supports, once we lose 68,500, we are left with 66,200 before going for $63,800,” said Javier Molina, senior market analyst at eToro.
Source: Ambito
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