As Bitcoin, Ethereum and Solana face sharp selloffs, some point to bullish catalysts and reduced regulatory risk, while others point to the potential for a market rally.
Is there a chance for an upturn, or will the slump continue?
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Posted on April 30, 2024 at 5:08 PM ET.
Markets were down sharply on Tuesday due to a number of factors, including regulatory uncertainty and a confluence of economic indicators that suggest a difficult path ahead.
Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) have all posted notable losses, with broader implications emerging as investors brace for potential changes in U.S. monetary policy. It's affecting. Disappointing inflows into crypto funds and increased regulatory scrutiny, particularly regarding Ethereum's status as a security, have exacerbated the economic downturn, said Brian Ruddick, senior strategist and analyst at crypto trading firm GSR. It is said that he did.
Bitcoin's current price is $60,083, down 4.1% in the past 24 hours and down 15% this month. Ethereum has fallen 6.9% to $2,951 in the past 24 hours, while Solana has fallen 8.9% in the same time frame. Solana is currently trading at $123, a drop of up to 20% in the last month. According to Coinglass data, $387 million in crypto positions liquidated Within the last 24 hours.
What's behind the decline?
Ruddick provided some insight into the reasons for the current market downturn. “Risk assets are underperforming ahead of tomorrow's Fed monetary policy decision and press conference,” he told Unchained. There is a possibility that he may take a negative attitude.”
The sentiment comes on the heels of new economic data showing faster-than-expected wage growth and could prompt tough action from the Federal Reserve. Mr. Ruddick added: “We got paid a lot of money.'' data today,'' he said, hinting at potential inflation concerns that could influence tight monetary policy. Meanwhile, the yield on two-year U.S. Treasuries has rebounded above 5%, making it more difficult for the Fed to cut interest rates and providing a tailwind for risk assets such as cryptocurrencies.
Additionally, the market is reacting to several external factors that worsen the bearish outlook. “Inflows into the US Spot Bitcoin ETF have clearly turned negative in recent business days,” Ruddick noted. “And the debut of Hong Kong’s crypto ETF was disappointing with just $12 million in first-day trading volume.”
Read more: Hong Kong does not define Ether as a security, issuer says as spot crypto ETF launches
Regulatory challenges also continue to cast a shadow on the market. According to Ruddick, a recent court filing revealed that “the SEC approved a formal order to investigate whether ETH is a security in early 2023,” highlighting ongoing regulatory risks. It is said that it became
Ruddick remains cautious about the near future. “Positive catalysts appear to be declining, while negative catalysts appear to be increasing,” he said. Ruddick is skeptical about the immediate prospects for recovery, as the effects of things like Bitcoin's halving fade and the regulatory and economic situation remains uncertain.
Other potential negative pressures include the Mt Gox trustee repatriating 142,000 BTC by the end of October, and “the regulatory risks surrounding USDT appear to be greater,” Ruddick said. He cited factors such as:
What are the chances of a rally?
Mark Connors, head of research at investment firm 3iQ, took a different view, suggesting that despite current challenges, there could be upside potential similar to past market recoveries. “The market is approaching either August 2015, September 2019, August 2022, or March 2023, and interest rate and currency volatility will cause the market to crash and the Fed and possibly It prompts swift and decisive action from the Treasury Department,” Connors told Unchained in an email. He believes that “BTC's unique properties will cause it to rally like it did in March 2020 and March 2023, leading the rally in broader digital assets.”
But Connors points to recent movements in bond and currency markets as another sign of trouble. “Between this month's decline in the UST10Y (-3.3%) and the historic one-day movement in the yen, there is not only little downside risk for the market until the Fed capitulates and resumes quantitative easing. It’s going to get even bigger.”
While there may be potentially positive developments, such as large wealth managers purchasing spot Bitcoin ETFs for their clients and significant legislative progress, Ruddick concluded: ”
