Fear of recession in the West, surging inflation, rising interest rates and the geopolitical crisis continue to drive extra short-term volatility in the crypto market, and investors would adopt a wait-and-watch attitude
After being in the red for over a month, cryptocurrency markets have pared some of their losses and are trading up about 10 percent over the last week.
The world’s largest digital currency by market cap, Bitcoin (BTC), is above the psychological level of $21,500, up 10 percent for the week and up 5 percent on Friday alone.
Anndy Lian, Chief Digital Advisor of the Mongolian Productivity Organization, said BTC rallying together with US stocks was a cause of concern and the rally may be shortlived.
Investors should watch the US jobs report on Friday closely in the short term and until something concrete is set in stone, should not drop their guard, Lian said.
“Also bearing in mind that BTC is still down by around 70 percent from its all-time high and 50 percent lower in 2022. The short-term bull is not sustainable. The threat of more deleveraging is still a key concern for crypto. The global economic uncertainties and risks remain high. A wait-and-see mindset would be more suitable at this point in time,” Lian said.
Raj Kapoor, founder of India Blockchain Alliance, a think-tank, said BTC’s price rose thanks in part to a stock market rally following the release of the Federal Reserve’s minutes and cautioned that while prices have rebounded, the crypto market has not hit the bottom yet and crypto prices can be expected to drop further over the coming weeks or months.
“There are several reasons – starting off from bearish crypto headlines that continue to drag down bitcoin below key technical levels, intermittent talk of recession, many crypto deals falling apart. To add to that surging inflation, geopolitical crises, and rising interest rates continue to drive extra short-term volatility in the crypto and stock markets. The crypto market has continued to move in tandem with the stock market in recent months, which makes it even more intertwined with global economic factors,” Kapoor said.
Crypto exchange Kraken’s Dan Held argued that the “mass contagion” of the domino effect of one cryptocurrency over the other seems to have been “contained” by FTX crypto exchange, whose CEO Sam Bankman-Friend recently said he and his company still had a “few billion” on hand to shore up struggling firms that could further destabilize the digital asset industry.
He added that crypto lending firm Celsius paid off all its outstanding loans for BTC, bankruptcies have already been filed and inflation fears are cooling off.
Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.
An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.