Cryptocurrencies rebound up to 10% pending the Fed

Despite the short-term optimism, driven by the rebound and by the purchases of investors and bargain hunters, experts point out that the behavior of the market in the coming hours is entirely in the hands of the monetary policy decision of the Federal Reserve of USA (Fed). “Risk appetite is generally holding up. The response of bitcoin will depend on the response of the Fed”, comments Craig Erlam, an analyst at Oanda shared by Bolsamanía.

“If risk appetite worsens again, we could see this price area come under severe pressure,” Erlam ventures. And adds: “If it can hold above this zone in the short term, it could be a very positive sign.”

But not everything depends on the Fed. The tensions between Russia and Ukraine are also weighing on bitcoin, since an armed conflict could affect mining operations in the area. For now, NATO and the US are backing down on sending troops to the area, but the markets remain very concerned about the potential impact “for energy, agriculture, fertilizers, interest rates and currencies,” they list. from Rabobank, which also weighs down risky assets.

Lastly, the cryptoactive market is weighed down by uncertainty regarding the regulatory measures that several countries are adopting or will soon adopt. On the one hand, there is speculation that the US will publish a specific regulation for cryptocurrency trading platforms, on the other, Russia has threatened to ban digital currencies. In general, investors will welcome new rules that clarify what can and cannot be done in this market, experts explain, but if they are too restrictive, they can cause an even more negative impact on prices, they said.

The proof is the $30,000

Analysts are beginning to warn what the bottom of Bitcoin will be in this context of high volatility. To consider it a new “crypto winter”, just like in 2018 and 2019, the correction should take the price to $20,000. Back then, the correction was 80%.

But analysts for now rule out that possibility and estimate that Bitcoin is in a “cooling” period from its all-time high, waiting for the long-awaited rebound to $100,000, which by 2021 did not come.

“If we look back over the last few months, it is clear that the ‘crypto’ market is positively correlated with equities”, explained Naeem Aslam, head of analysis at AvaTrade. The drop in sentiment due to various risks, such as the tightening of monetary policy by central banks, especially the US Federal Reserve (Fed), and global geopolitical tensions, “has persuaded investors to withdraw capital from the volatile digital sector”, he assures.

To the above we must add other issues such as US tax season, stand out from ‘Bloomberg’, or other problems typical of the cryptocurrency industry, such as the barrage of regulations that are prepared in countries like the USA, Russia or Singapore. It was well known that 2022 was going to be the great year of regulations and legislation in this market, an element that, in reality, is very welcome by investors, but that, from the outset, causes retailers to panic because of the fear new very restrictive rules.

In general, older investors describe these types of massive outflows of funds with the term “FUD”, an acronym for “fear, uncertainty and doubt”. They defend that “this market is supported by solid fundamentals and, therefore, investors should take advantage of this opportunity to pocket cryptocurrencies at a bargain priceAslam underlines.

Back to bitcoin, it faces a litmus test. “The psychological blow of losing $40,000 will be nothing compared to what can happen si caen los u $ s30.000”. “This is a significant level of technical support that was maintained throughout 2021, despite extensive testing earlier in the year and then throughout the summer. If it gives in, the picture can get very complicated, ”he continues, and, then, yes, welcome the crypto winter.