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BTC made a brief rally on Wednesday after the Fed rate hike was announced. However, the price of Bitcoin suddenly fell below $36,000 on Thursday afternoon, subsequently driving the entire crypto market lower, erasing the current post-Fed meeting cryptocurrency "rally gains.
Noisy Trading Lacking Upward Momentum for Now Risky assets climbed after Fed Chairman Powell said he would not add 75 basis points, with trading volume and real volatility spiking around the announcement, but trading volume quickly fell back within 24 hours.
The intraday "relief rally" in cryptocurrencies and stocks on Wednesday was "trader noise," according to Mike McGlone, a commodity strategist at Bloomberg Intelligence. (Noisy traders are usually non-professionals who act illogically and trade with incomplete or inaccurate data.)
At the time, the Glassnode team also cautioned that bitcoin prices remain range-bound and continue to lack any clear macro momentum in either direction, that correlations between bitcoin and traditional markets remain near all-time highs, and that the broader perception of bitcoin as a risk asset remains a significant headwind.
Intertwining with Global Economic Factors Adding to Uncertainty Following the Fed's rate hike meeting, on May 6, Robert Holzmann, a member of the European Central Bank's Management Board, said that the central bank will discuss a rate hike at its June meeting and may decide to raise rates once.
GSR Institutional Crypto Trader noted that bitcoin has had its ups and downs in correlation with stocks, especially during major macro events such as the Federal Open Market Committee meeting. In terms of sentiment, it is more important to see how the cryptocurrency market performs at the close of the equity market.
In addition, there is no relaxation in regulation of the crypto market, as recently, European regulator MONEYVAL listed cryptocurrencies as one of the anti-money laundering threats. In addition, the Central Bank of Argentina (BCRA) announced that banks in the country are banned from offering cryptocurrency services to their customers. The BCRA's statement said that banks are prohibited from providing services for any digital assets that are not regulated by the central bank, a move that amounts to a de facto ban as digital assets are currently not regulated by the Argentine government.
Market analysis suggests that several factors, including rising inflation, geopolitical crises, crypto regulation and shifts in U.S. monetary policy, continue to drive additional short-term volatility in cryptocurrency and equity markets. In recent months, the crypto market has increasingly tracked the stock market, which has made it more intertwined with global economic factors.
BTC made a brief rally on Wednesday after the Fed rate hike was announced. However, the price of Bitcoin suddenly fell below $36,000 on Thursday afternoon, subsequently driving the entire crypto market lower, erasing the current post-Fed meeting cryptocurrency "rally gains.
Noisy Trading Lacking Upward Momentum for Now Risky assets climbed after Fed Chairman Powell said he would not add 75 basis points, with trading volume and real volatility spiking around the announcement, but trading volume quickly fell back within 24 hours.
The intraday "relief rally" in cryptocurrencies and stocks on Wednesday was "trader noise," according to Mike McGlone, a commodity strategist at Bloomberg Intelligence. (Noisy traders are usually non-professionals who act illogically and trade with incomplete or inaccurate data.)
At the time, the Glassnode team also cautioned that bitcoin prices remain range-bound and continue to lack any clear macro momentum in either direction, that correlations between bitcoin and traditional markets remain near all-time highs, and that the broader perception of bitcoin as a risk asset remains a significant headwind.
Intertwining with Global Economic Factors Adding to Uncertainty Following the Fed's rate hike meeting, on May 6, Robert Holzmann, a member of the European Central Bank's Management Board, said that the central bank will discuss a rate hike at its June meeting and may decide to raise rates once.
GSR Institutional Crypto Trader noted that bitcoin has had its ups and downs in correlation with stocks, especially during major macro events such as the Federal Open Market Committee meeting. In terms of sentiment, it is more important to see how the cryptocurrency market performs at the close of the equity market.
In addition, there is no relaxation in regulation of the crypto market, as recently, European regulator MONEYVAL listed cryptocurrencies as one of the anti-money laundering threats. In addition, the Central Bank of Argentina (BCRA) announced that banks in the country are banned from offering cryptocurrency services to their customers. The BCRA's statement said that banks are prohibited from providing services for any digital assets that are not regulated by the central bank, a move that amounts to a de facto ban as digital assets are currently not regulated by the Argentine government.
Market analysis suggests that several factors, including rising inflation, geopolitical crises, crypto regulation and shifts in U.S. monetary policy, continue to drive additional short-term volatility in cryptocurrency and equity markets. In recent months, the crypto market has increasingly tracked the stock market, which has made it more intertwined with global economic factors.
On May 6, the three major U.S. stock indices closed sharply lower, with the Nasdaq down 4.99%, the S&P 500 down 3.55%, and the Dow down 3.11% And clearly, bitcoin prices have been affected by the correlation.
Institutional Investors' Mindset Dominated by Uncertainty The current crypto market sentiment is not positive. According to Coinbase analytics platform Skew, implied volatility (a measure of investors' willingness to buy BTC options) has fallen to its lowest level (3.1%) since the beginning of 2019. The metric measures how much options traders expect to pay in the near future.
Michael Saffai, a partner at Dexterity Capital, a crypto asset trading firm, said near-term uncertainty continues to dominate the mindset of institutional crypto investors. The recent liquidation could exacerbate the pullback, but the asset still has a solid $30,000 floor, so I don't think we'll see a massive pullback similar to what we saw in 2020 and 2021.
Also, according to the latest Web3 report from blockchain analytics firm Chainalysis, NFT saw explosive growth in 2021, but the market leveled off heading into 2022, maintaining a growth attitude in January but falling into a slump in February before starting to recover in mid-April. As of May 1, more than $37 billion has been injected into the NFT market. The number of active NFT pools on OpenSea has also continued to grow since March 2021 and now exceeds 4,000. However, the growth of institutional investors has not continued. NFT purchases by institutional investors grew weekly between late November 2021 and mid-February 2022, but then abruptly declined and institutional NFT activity has not yet reached the levels seen in winter 2021.
In addition, according to the latest data from Coinshares, outflows from the market in one month due to institutional investor withdrawals totaled more than $339 million. While the market saw similar volatility earlier this year, the study suggests that this volatility did not reverse that trend. According to Coinshares, it started the year at about $467 million, a difference of $128 million. According to the report, bitcoin funds accounted for the majority of recorded withdrawals.
On May 6, the three major U.S. stock indices closed sharply lower, with the Nasdaq down 4.99%, the S&P 500 down 3.55%, and the Dow down 3.11% And clearly, bitcoin prices have been affected by the correlation.
Institutional Investors' Mindset Dominated by Uncertainty The current crypto market sentiment is not positive. According to Coinbase analytics platform Skew, implied volatility (a measure of investors' willingness to buy BTC options) has fallen to its lowest level (3.1%) since the beginning of 2019. The metric measures how much options traders expect to pay in the near future.
Michael Saffai, a partner at Dexterity Capital, a crypto asset trading firm, said near-term uncertainty continues to dominate the mindset of institutional crypto investors. The recent liquidation could exacerbate the pullback, but the asset still has a solid $30,000 floor, so I don't think we'll see a massive pullback similar to what we saw in 2020 and 2021.
Also, according to the latest Web3 report from blockchain analytics firm Chainalysis, NFT saw explosive growth in 2021, but the market leveled off heading into 2022, maintaining a growth attitude in January but falling into a slump in February before starting to recover in mid-April. As of May 1, more than $37 billion has been injected into the NFT market. The number of active NFT pools on OpenSea has also continued to grow since March 2021 and now exceeds 4,000. However, the growth of institutional investors has not continued. NFT purchases by institutional investors grew weekly between late November 2021 and mid-February 2022, but then abruptly declined and institutional NFT activity has not yet reached the levels seen in winter 2021.
In addition, according to the latest data from Coinshares, outflows from the market in one month due to institutional investor withdrawals totaled more than $339 million. While the market saw similar volatility earlier this year, the study suggests that this volatility did not reverse that trend. According to Coinshares, it started the year at about $467 million, a difference of $128 million. According to the report, bitcoin funds accounted for the majority of recorded withdrawals.
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