Monday Mayhem in major markets take cryptocurrencies beyond critical support levels.
Cryptocurrency prices witness a fresh round of sharp selling driving the price of the most dominant Cryptocurrency Bitcoin down to around $24,000 levels. The bulls were defending the $29,000 levels and were staging relief rallies from those levels till last week. The market was anticipating some upside action from those levels, but weak closing trades witnessed heavy selling pressure taking the prices further southwards, beyond the critical support level of $29,000. The next support lines are forming around $18,000 and the market is anticipating the Bitcoin prices would be testing these levels very soon.
The financial markets are experiencing a selling pressure world over, major currencies like Euro, Yen, Pound are all weakening against the USDollar. The stock markets across Australia, Japan, India, Europe including the US are experiencing sharp sell-offs.
The rapid rise in costs and inflationary pressures in the US builds a case of further raising the interest rates in order to control inflation. It is anticipated that the Fed will further raise the domestic interest rates within the US, temporarily strengthening the USD, but resulting in lowering economic activity. This has impacted the prices of the Cryptocurrencies along with the Stocks, Currencies and Commodity prices as well.
Although a critical support level is breached, the Bitcoin prices will keep staging relief rallies to gain back ground towards $29,000 levels – but it will be meeting resistance there for the time being. A long term accumulating investor can pace out staggered accumulation between $18,000-$29,000.
However, we believe that with the present prevailing economic conditions – particularly with a war hampering economic activity along with intermittently resurging pandemic scares, the road to recovery looks very challenging in the near term.
In case regulatory clarity emerges in US and global markets with regard to Blockchain and Cryptocurrency’s then the industry adoption of blockchain and cryptocurrency will enhance and this will create new investment and industry demand which would lift the market up faster.
In case these regulatory changes take time then the markets will take a new turnaround based on general economic fundamentals. However, compared to earlier steep falls in the market, the scenario now is little different as the markets have become more institutional and diversified which means the market will turn into buying at these dips and low levels.
Joseph Massey, MD, and CEO, CryptoWire