Crisis or Time of Opportunity: a brief on the current economic situation
Even before February 24, 2022, investors expressed definite concern about the global economic situation in the world: inflation was growing at a record pace, the NASDAQ index fell by 30%. With the invasion of Russia in Ukraine, a food and energy crisis began to develop, caused by military actions and the occupation of territories and sanctions against the aggressor country, which in the end only strengthened negative economic trends in the world.
Analysts of The Economist talked about this in more detail in a recent review.
What is the situation with the cryptocurrency market?
The leading cryptocurrency has finally completed two weeks of consolidation movement within the range of USD 19000–22000. During this period, the market was saturated with negative statements of the officials of the Federal Reserve System about the record level of inflation and the maintenance of the tendency towards tight monetary policy.
Inflation in the US reached 9.1% annually, indicating a number of negative consequences for the cryptocurrency market. As a result, the key rate at the last meeting of the Fed was increased by 75 basis points.
Such measures, of course, are designed to stop the rampant growth of the CPI and strengthen the US dollar. However, this will undoubtedly harm the stock market and, accordingly, the cryptocurrency market.
The level of volatility due to the publication of negative news and specific movements of the body of investors has increased and will remain at a high level. Currently, there are no signs of a bull market, and the USD 19000–19400 range remains the key line for BTC protection.
In the medium to long term, there is no doubt that the asset will spend the next six months in consolidation with no hint of a bull market. Bitcoin and, accordingly, altcoins will be pressured by such fundamental factors as the war in Ukraine, the energy and food crisis, and record inflation in the US and the EU. All these factors are already provoking low trading volumes, which indicates the fear of investors and the lack of understanding of the near future.
Technically, the Fed policy will continue to pressure the stock market, which is correlated with Bitcoin. Based on this, Bitcoin has much more downside than if a bear market were to occur in a stable macroeconomic environment. With this in mind, Bitcoin’s upward movements will be directly related to the S&P 500 and NASDAQ indices. The main trigger for the growth of high-risk assets will be a correction or a local crisis in DXY. With this in mind, the main bullish goal for Bitcoin for the next six months is to reach USD 30,000–40,000.
How to be and what to expect “tomorrow”?
Experts at Glassnode claim that the current bear market is likely to remain at this level or tend to find a new bottom in the event of further economic conditions.
The least risky for investors will be to refrain from impulsive actions and wait for further clearing of the market from “tourists” and, of course, improve the global economic situation.
*This publication should not be considered financial or investment recommendations.
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