The cryptocurrency price declined marginally this evening as volatility in recent weeks continued on Monday. The volatility comes amid a broad market sell-off driven by investors rebalancing their portfolios to account for a more aggressive Fed, which is now expected to raise rates by up to seven times this year as it fights rising inflation.
Bitcoin, the world’s largest and most popular cryptocurrency, was trading down 0.6% at $42,481 in the previous trade, while its main rival Ether was up 0.2% at $2,931.07.
Bitcoin is down about 38.5% since it peaked around $69,000 in November last year as the Federal Reserve and other global central banks began tightening financial conditions and draining pandemic-era liquidity from the system. Had done it.
Meanwhile, Ethereum is down 40% from the November high at $4,878.26.
The global cryptocurrency market cap today stands at $1.99 trillion, down 0.3% over the past 24 hours.
While proponents of the cryptocurrency once pointed out its lack of correlation with other assets, bitcoin and its peers have seen huge gains over the past two years, with stocks rallying as the Fed and other central banks looked to encourage stimulus in the global economy. Pumped to an unprecedented level. Bitcoin is up 1,039 per cent and Ether is up 2,940% since March 2020, although rallies in both cryptocurrencies have been hampered by many-belly churning sell-offs.
There are concerns that an ongoing aggressive central bank tightening cycle will hamper riskier assets, making it difficult for some traders to maintain their bullish outlook on bitcoin and other cryptos, an asset class known to be Already identified with intense volatility.
Investors said rising tensions in Ukraine, where Washington warned a Russian offensive could begin any day, could also fuel a broader market move.
“Bitcoin has really become the ultimate momentum trade and there are a lot of risks that could trigger a drop of anywhere from 40%,” said Ed Moya, senior analyst at Oanda.
Bitcoin’s volatility hasn’t deterred some analysts from trying to gauge the currency’s fair value or pinpoint potentially important price levels.
Analysts at JPMorgan estimate bitcoin’s current fair value to be around $38,000 — down about 15% from its recent price — based on its volatility compared to gold, another asset investors often use to hedge their portfolios against inflation and economic uncertainty. use to hedge.
Meanwhile, Wanda Research said in a recent note that most bearish bets on a weak bitcoin price were recorded at around $47,000, and that “a major short-squeeze could occur if the above threshold is exceeded.” , and retail investors fall back on crypto-trading.”
Meanwhile, the correlation between bitcoin and the S&P 500 hit an all-time high on January 31, according to data from BofA Global Research, which is the case for those hoping to use the cryptocurrency as a hedge against market turbulence. reduce the.
Investors are anticipating minutes from the Fed’s most recent monetary policy meeting next week on Wednesday. Walmart and chipmaker Nvidia Corp will be among the companies reporting results as corporate earnings season gets underway.
Some investors are bracing themselves for an exit from volatility in bitcoin, betting that the long-term value proposition of blockchain technology, the underlying supply limits, and the network effects it generates, will remain the same despite persistent price fluctuations. .
Dogecoin price was trading 5.8% lower at $0.146202 while Shiba Inu was trading higher by 5.2% at $0.0003015. Other coins also performed poorly in the form of Stellar, Avalanche, Cardano, Polygon, XRP, Polkadot, with prices trading lower over the past 24 hours, while Solana and Terra were up 0.9% and 1.5% respectively.
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