Market Analysis

Cryptos Fall on Stock Market Jitters

from Trust Nodes 5 years ago 0 0 652

Pretty much all cryptos are down today between 5% to 10%, with bitcoin falling from $6,600 to $6,300 while eth fell by $30 to just above $200.

Trading volumes are up to near $16 billion, while Tether’s market cap has fallen slightly, as has the algorithmic stable coin Dai.

All top three cryptos saw their margin long buys fall, adding some price pressure of their own. While short selling is up:

As can be seen, 50,000 eth longs have sold by closing, while 70,000 eth short selling has been added, with a similar story repeating across bitcoin and ripple.

We can not see any crypto specific event to potentially explain this recent price action, thus must conclude it is due to jitters from the stock market.

Stocks have fallen globally between 3% to 5%, with most stock indexes down on the year between 10% to 20%.

Gold, on the other hand, is up in a cup and handle W of sorts on the hourly, presumably due to some flight to safety.

While oil is down a bit to $82 from $85, with the dollar index down slightly as well to 95 from its recent high of 97.

The big questions for cryptos is whether they’re still a hedge, like gold, or more of a risky asset, like stocks.

Cryptos usually do not correlate due to having their own factors which drive price actions, but it isn’t very clear whether that has changed following the entrance of Wall Street.

On the one hand, cryptos are risky in as far as their value fundamentally is determined by the level of adoption, something which is not easy to estimate and may well depend on whether cryptos can handle additional usage demand.

On the other hand, as cryptos are limited in supply and/or usually have a fixed inflation rate, they can have more gold-like qualities.

Their apparent reaction to stocks falling, however, might suggest they reflect – at least to some extent – Fed’s actions where interest rates are concerned.

Yet the big question remains whether the money taken out of stocks will go to just gold and bonds, or whether some of it will make its way to cryptos.

With the even bigger question being wether this is really just a correction in stocks, or whether Fed is now set on crashing the economy due to their complete ineptitude and utter incompetence.