Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Bitcoin: Gloomy Times Lie Ahead

By CryptocurrencyMay 26, 2022 08:00AM ET
www.investing.com/analysis/bitcoin-gloomy-times-lie-ahead-200624913
Bitcoin: Gloomy Times Lie Ahead
By   |  May 26, 2022 08:00AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Bearish sentiment in the cryptocurrency market remains at extreme levels. Bitcoin has been edging lower for seven consecutive weeks, which confirms its strong correlation with movements in the US stock market.

The Dow Jones Industrial Average notched eight losing weeks in a row, which was the longest negative trend since 1932, when the Great Depression took a heavy toll on the country. The S&P 500 and NASDAQ posted losses for seven straight weeks - the longest losing streak since the 2001 dot-com bubble.

All three indexes lost about 3% last week. Investors prefer to stay away from the stock market amid economic growth concerns. According to Goldman Sachs, the probability of a recession within the next two years is about 35%. Morgan Stanley analysts see the odds of a recession as roughly 40%.

Federal Reserve Chairman Jerome Powell spoke on Tuesday at The Future of Everything Festival hosted by WSJ. Powell noted that the Fed would like to see "clear and convincing evidence that inflation pressures are abating and inflation is coming down".

Only then will the central bank consider turning away from its aggressive rate hike path. Powell also reiterated that the Fed is committed to 50 basis point rate increases at its June and July meetings, adding that no one should question the Fed's resolve in combating inflation, even if this affects employment. It is worth noting that it's still unclear how far the Fed is willing to go with its rate hike plan. If inflation does not show a steady decline in the foreseeable future, the Federal Reserve may push its federal funds rate to 4% in the next 2-15 months instead of the previously expected 3%.

Considering the Fed's strong determination to combat inflation, many experts project a significant growth potential for the US dollar, which will increase against the backdrop of an active rate hike cycle and surging US Treasuries. These are the right conditions for the traditional dollar to become a more attractive investment option than the cryptocurrency sector.

It should also be noted that the Fed's aggressive rate hike cycle will cause a long-term downtrend in the US stock market. Taking its already established correlation with the cryptocurrency market, the BTC and Ethereum may follow this bearish path.

Another negative factor for the digital currency industry is the devastating collapse of UST and the LUNA token, which has gained increased authorities' attention to stablecoins. US Treasury Secretary Janet Yellen said stablecoin issuers should be subject to the same rules as banks, urging Congress to pass legislation to create a regulatory framework for stablecoins.

Naturally, the increased oversight of the stablecoin sector could put an end to anonymity and start the process of a gradual decay of the entire cryptocurrency industry. That being said, we recommend shorting BTC/USD with the target of $25,000.

Bitcoin: Gloomy Times Lie Ahead
 

Related Articles

Bitcoin: Gloomy Times Lie Ahead

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Todd Gray
Todd Gray May 28, 2022 5:02PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
So, it really comes down to whether or not the supply side, and retailers, are to greedy. They have the choice over which way the economy goes. If they choose to be pigs, we all get slaughtered.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email