Bitcoin has put up a brave face, drifting around the USD 30,000 level that it has been hovering around over the last couple of weeks following the collapse of the TerraUSD algorithmic stablecoin.
The largest digital crypto on the planet, Bitcoin, drifted down by 5%, reaching USD 29,700 on Monday 23rd May 2022. Earlier on in the day, the price had rallied higher, providing reprieve to traders who had watched in shock as it tumbled for about seven weeks in a row. According to Bloomberg, it was the longest losing streak since 2011.
Notably, the loss mirrored what was happening in the S&P 500 index, signifying the close correlation between cryptos and stocks.
Crypto Trends Raise Need for Regulation, BTC to Hover ~ US$ 30K for Weeks
According to Mark Newton, a strategist at Fundstrat Global, if the S&P drops further, that should provide the best opportunity to buy Bitcoin. “There’s a lot of bearishness, and we should be approaching a time when you really want to buy into that in the next couple of months,” added Newton.
In recent weeks, Bitcoin has been struggling because of the elevated inflation, even after central banks raised interest rates to boost monetary tightening. Regulators across the globe have also intensified the calls for stricter oversight, especially after the collapse of the TerraUSD stablecoin’s catastrophic breakdown after the loss of its peg to the US dollar.
Although Bitcoin was considered a good hedge against inflation, it has demonstrated that it is closely correlated to risk assets, such as companies in the NASDAQ 100 that have tumbled as the monetary regime changes.
“The markets right now are just punishing anything that’s on the speculative side,” said Chris Gaffney, the leader of the TIAA Bank.
The tendency of crypts to follow stocks implies that crypto enthusiasts are now closely watching economic indicators to try and establish where monetary policy and crypto prices are heading.
According to Noelle Acheson and Konrad Laesser from Genesis Trading, Bitcoin is likely to hover at about USD29-30K in the next few weeks. In addition, they said that the economic-data releases, such as the US GDP and inflation measures, could change the narrative.
Rick Bensignor, a former Morgan Stanley strategist and the president of Bensignor Investment Strategies, says that Bitcoin is not likely to break higher anytime soon. “I’d still expect another four weeks of heaviness,” he added.
