Crypto Won’t See Bull-Run Anytime Soon, This Expert Explains Why
18 October 2022 - 7:23AM
NEWSBTC
The crypto market is stuck in a tight range as larger
cryptocurrencies are unable to break above key levels of
resistance. The sector has been mostly inclined to the downside
since September when Ethereum completed “The Merge”. Related
Reading: A Bullish Week In Bitcoin On The Way? BTCUSD Analysis
October 17, 2022 At the time of writing, Bitcoin (BTC) trades at
$19,500 with a 2% profit in the last 24 hours while Ethereum
records a 3% profit over the same period. Other cryptocurrencies
follow a similar trajectory during today’s trading session with XRP
and Cardano amongst the worst-performing assets in the sector.
Crypto And Global Markets Close To A Bottom, But Far From A Bull
The successful completion of “The Merge” left the crypto market
without a narrative of its own. Thus, the nascent asset class has
been moving in tandem with traditional equities and major indexes.
Macroeconomic forces have been dominating the price action in
risk-on assets, most of crypto and equities, as the U.S. Federal
Reserve (Fed) rushes to slow down inflation. The financial
institution has been hiking interest rates unleashing a bear market
that has rippled across the financial world. In this situation,
every market participant wants to know when crypto will finally
bottom out. In order for this to happen, equities must find a
bottom first, and according to Jurrien Timmer, Director of Macro
for Fidelity, this might be close to happening. Via his official
Twitter handle, Timmer compared the current situation with the 1940
to 1947 inflationary periods in the United States. The North
American country was going through a period of high inflation after
World War II. Timmer referred to this situation as a
fiscal/monetary cocktail, the country was recovering from a major
conflict with most of the world in ruins, still hurting from the
massive expending and low resources. At that time, the S&P 500
saw a 30% decline. Right now, this index is approaching those lows
as it follows a similar trajectory. As seen in the chart below, the
S&P 500 proceeded to move sideways for multiple years as
inflation peaked at 19.6%. In comparison, today’s inflation stood
at 8.9% at its highest month-to-month metric. Timmer said: The
1946-49 bear market had a nominal decline of 30% and a real decline
of 46% (amid 20% inflation). It was entirely a driven by
valuations. The analog suggests we are near the bottom, but a long
way from the next bull. Related Reading: Maker DAO Trends Higher As
50 EMA Holds As Support, Can The Price Breach $1,200? Other experts
expect a similar scenario for Bitcoin and the crypto market. This
might be positive news for long-term holders looking to accumulate
at current levels, but not for those betting on a new bull run in
2022 or even 2023.
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