Cryptic ball: bears are drooling.
Bitcoin traded below $20k for some hours this Wednesday, in what amounts to a weakening of that key level. Fortunately, it seems bears - or forced sellers - are lacking the ammo to push prices lower. What happened and what can we expect?
- In brief, stonks happened. The correlation between equities and crypto is indeed fading but it is still relevant enough to influence this market. And most US stocks fell slightly on remarks from the chair of the Fed, Jerome Powell.
- The world's most powerful central banker said a recession is "possible" and said that the elusive soft landing of the economy after the Fed's fight against inflation is "very challenging". In other words, an economic crisis is likely.
- Still, if the markets are able to recover before the weekend - after all, the Fed's chair also admitted their goal is still to try to avoid a recessionw while taming inflation - then I believe the end of the month will be rather smooth.
- However, I'm now beginning to reassess my views on the second half of the year in case the world economy starts falling off a cliff. Moreover, more capital can exit crypto markets as DeFi yields fail to provide their promised returns.
I'll be monitoring fear levels and early signs that some stocks are clearly forming bottoms, even if the indexes themselves still look shaky. That paired with bitcoin hanging confidently to $20k would be a nice source of optimism for the summer!
Chart art: weekend is approaching.
Three things: miners are dumping.
- Matt Levine provides the best explanation of the Solend debacle.
- Kyle Samani shares interesting ideas regarding NFT marketplaces.
- Kyle Waters analyses what BTC miners are doing with their holdings.