Cryptocurrency market 3/03 CHK: Bitcoin shows a signal to drop to 22,000, altcoins are on fire

BTC plunged to nearly $22,000 after economic data released yesterday showed the Fed is still likely to keep rates higher for longer.

Cryptocurrency Market

After a daily close at $23,465, BTC suddenly turned down more than 1,500 points, establishing a local bottom at $21,971 and currently trading just above the $22,000 threshold.

Matrixport, a crypto lending and trading platform, said the company is confident in BTC’s price momentum since mid-December, but signals from the US economy are now forcing it to be more cautious.

In a research report published early Friday, the company said it is not yet time for a full discount, but suggested cutting positions by 50% if Bitcoin (BTC) price drops below $22,800.

The market cap cryptocurrency has seen a sharp drop this morning and is currently trading around $22,400.

The US stock market has started to sell off again and US bond yields are moving higher, the report said. The yield on the 2-year Treasury note is currently around 4.87%, well above the November 2022 peak of 4.8%, and the difference between the 2-year and 10-year yields is at “not very positive” of – 0.87%.

Markus Thielen, head of research, wrote: “A stronger dollar and restrictive monetary policy are other negative signs.”

Trading volume in the crypto market has dropped from around $80 billion to $60 billion, which shows that traders are less interested in entering the market, while money is constantly flowing out of Paxos – The Binance (BUSD) stablecoin has resulted in its capitalization dropping to $10 billion.

The report also notes that the 60-day correlation between Bitcoin and the Nasdaq stock index is at its lowest level since December 2021, when the US Federal Reserve (Fed) first began announcing with market that a rate hike is imminent.

However, Matrixport still believes that US inflation will fall sharply this year and therefore, the Fed will stop raising interest rates, creating conditions for the market to recover.

Initial jobless claims fell 2,000 from a week ago to 190,000, below expectations of 195,000. The drop over the past week provides the latest evidence that the jobs market is still too tight, making it more likely to put pressure on prices. Unemployment data from recent weeks is moving in the opposite direction of what the US Federal Open Market Committee (FOMC) is looking for.

The FOMC has implied that initial jobless claims must increase to ease inflationary pressures, but claims have not increased since February 5.

However, the average number of first-time jobless claims over the past four weeks edged higher, to 193,000 from 191,250 in the previous week. Fed Chairman Jerome Powell and various governors have repeatedly noted their concerns about the robust job market.

The U.S. labor force participation rate of 62.4 (62.4%) remains well below pre-pandemic levels, while the “U-6” unemployment rate for part-timers and light workers, is 6.6%, relatively stable since June 2022.

The FOMC will expect the U.S. Labor Department’s announcement on the labor force participation rate to decrease and the U6 unemployment rate to increase on March 10. If this happens, it is likely that the Fed will scale back the rate hike and please crypto investors.

Altcoins were on fire after BTC suddenly plunged close to the $22,000 area this morning. Leading the decline was dYdX (DYDX) when evaporating more than 18% of the value. Followed by SingularityNET (AGIX) and Conflux (CFX) with a loss of 16%. Other projects such as Stacks (STX), Frax Share (FXS), Filcoin (FIL), Basic Attention Token (BAT), NEM (XEM), ssv.network (SSV)… all recorded a decrease of over 10%.

Ethereum (ETH) also plummeted, returning to the $1550 area after failing to hold the price above the $1,650 area. Ethereum faces a drop of around 5%, falling from $1,642 to $1,553. However, before ETH plummeted, its price rose slightly. This is where the “mystery fund” mentioned by Lookoonchain is moved.

Before ETH printed a giant red candle on the hourly chart, it was up slightly by almost 2%. At that time, an unknown fund withdrew 312 million USDC and transferred that stablecoin to various exchanges.

Macro factors

US stock markets rallied on Thursday, as government bond yields fell and a Federal Reserve official offered a less hawkish stance on interest rates. capacity. Crude oil prices rose on optimism about Chinese oil demand, but concerns about rising interest rates made it difficult for the energy price to break through.

As in recent trading sessions, investors continue to ruminate on economic data to shape expectations about the Fed’s next monetary policy moves. Data released on Thursday showed initial jobless claims fell again, a sign of tightening labor supply and the need to maintain policy tightening.

Investors were relieved, though, when Atlanta Fed President Raphael Bostic said he favored “slow and steady” rate hikes with 0.25 percentage point increments at a time to limit risk. For economy.

Indices fell at the beginning of the session, but after Mr. Bostic’s statement came out, the indexes turned green.

At the close, the Dow Jones Industrial Average rose 341.73 points, or 1.03%, to 33,003.57 points. An important contributor to this rally of Dow Jones was Salesforce stock with a gain of 11.5% after the software company announced positive quarterly business results and made a better-than-expected forecast for the coming time.

The S&P 500 index rose 0.76% to close at 3,981.35. The Nasdaq index rose 0.73% to 11,462.98 points.

In Europe, the latest inflation data reinforces the possibility that the European Central Bank (ECB) will continue to tighten monetary policy at this month’s meeting, even though the euro base interest rate is already at the highest level. over the past decade. According to statistics agency Eurostat, the consumer price index (CPI) in 20 countries in the Eurozone increased by 8.5% in February compared with the same period last year, down very little from the increase of 8.6% recorded in the previous year. in January, and higher than the 8.2% increase forecast by analysts.

The Stoxx 600 index of European stocks struggled before closing with a gain of 0.51%. The MSCI index of world stocks rose 0.37%.

The stock and bond markets have been driven by a variety of factors in recent weeks, according to Rothschild & Co.’s global investment strategist Kevin Gardiner. The main concern for stock prices lies in the period. Corporate earnings decline amid rising interest rates, while bonds are sensitive to inflation and interest rate expectations.

“The economic impact of tightening remains an unanswered question. Profits may become precarious, or they may not,” Gardiner told Reuters news agency.

On Thursday, government bonds were sold sharply in both the US and European markets, as inflation indicators reinforced expectations that interest rates will move higher and stay high for longer. . Falling bond prices boosted yields, with the yield on two-year German government bonds rising to their highest levels since October 2008.

In the US, manufacturing activity fell for a fourth straight month in February, but a gauge of raw materials prices rose, stoking fears that inflation will persist.

“Economic data has been stronger than expected,” said Steven Oh, global head of credit and bonds at PineBride Investments. According to Mr. Oh, any number that exceeds expectations could lead to policymakers becoming tougher.

This is reflected in the 10-year US Treasury bond yield rising to 4.066%, the highest in nearly 4 months. Yields on the 2-year term set a new 16-year high at 4.889%.

In the interest rate futures market, investors are betting 50-50 with the possibility that by September this year the federal funds rate will increase to 5.5 – 5.75%, from 4.5 – 4 ,75% now.

“We expect interest rates to stay higher for longer, and the stock market will continue to be volatile in the near-term,” a Wells Fargo report said, adding that the data Better-than-expected economic growth this winter has pushed the risk of a recession to the second half of 2023.

In the energy market, Brent crude oil futures in London rose 0.23% to settle at $84.5 per barrel. WTI oil futures in New York increased 0.32%, closing at 77.94 USD/barrel.