Cryptocurrency prices were mixed Monday and analysts cited the Federal Reserve’s hawkish stance and overall market weakness as key factors in the weekend’s rout.
Bitcoin, the world’s biggest cryptocurrency by market capitalization, inched higher to $48,756 at last check, after falling roughly 20%, since mid-day Friday. Ether was off less than 1% to $4,057.
“The overall weakness across the financial markets should be considered when trading crypto into the foreseeable future,” said Jake Wujastyk, chief market analyst at TrendSpider. “The hawkishness from Jerome Powell is also something that may hurt cryptocurrency as the Fed attempts to tame inflation by being more aggressive with their tapering program.”
Over the last several weeks, negative divergence has been forming on the Bitcoin weekly chart and the Williams Percent Range oscillator, Wujastyk said, adding that this inefficiency in price was “a warning sign of momentum fading.”
“The price is now correcting down and may get to the volume weighted average price from the June lows around $47,500,” he said. “With Bitcoin being a proxy for the rest of the crypto market, this has affected almost all facets of the cryptocurrency world.”
Winston Ma, CFA Managing Partner of CloudTree Ventures, Author of The Digital War – How China’s Tech Power Shapes the Future of AI, Blockchain and Cyberspace,” had some simple advice regarding cryptocurrency.
“Don’t fight the Fed,” he said. “During the past 18 months, the zero-interest rate of the Federal Reserve, in part, has helped the tremendous run of the Bitcoin and all other crypto tokens.”
Now, Ma said, “the Fed is starting the taper and rate hike talk, which may lead to a correction in risk assets, of which the crypto asset market is a part.”
Ma noted that the weekend selloff also comes ahead of Wednesday’s scheduled testimony by executives from eight major cryptocurrency firms, including Coinbase Global (COIN) and FTX Trading CEO, before the U.S. House…
