Cryptocurrencies, particularly bitcoin, have been tracking closely with the stock markets since the start of the year. Crypto prices are pushing up as investors begin to feel more bullish toward the crypto market, thanks partly to the recent rally in stock markets across the U.S., Europe, and Asia, he says. The size of the industry itself had fallen below $1 trillion, a significant decrease from just a few months prior when it was worth more than $3 trillion.īut investors are holding out hope that the shakeout over the past few weeks is nearing its end, says Marcus Sotiriou, a market analyst at digital asset broker GlobalBlock. Several high-profile crypto companies, most notably hedge fund Three Arrows Capital and crypto lender Celsius, filed for bankruptcy. Bitcoin and ethereum were down more than 70% since the peak of last year’s bull run. Less than a month ago, crypto was in the midst of one of the worst market crashes it has ever experienced. While that could still happen, Moya says if more institutions buy in over the coming weeks, that could allow for bitcoin’s bottom to have been made since “market positioning became extreme.” What’s Next for the Crypto Market and How Should Investors React? Many crypto experts we’ve spoken to over the last few months have been expecting one last major plunge for the crypto market, with some targeting a bottom of anywhere between $10,000 to $14,000 for bitcoin. Ethereum has been up more than 50% over the last few days and was trading above $1,600 on Wednesday. Typically, the more confident investors feel about the stock market and the broader macroeconomic environment, the more risk they’re willing to take on.īitcoin rose above $24,000 on Wednesday, hitting its highest level in more than a month. He says investors are beginning to feel more optimistic about the economy, inflation, and rising interest rates, which is a positive sign for risky assets. Often, a rise in stocks will also lift cryptocurrencies. Moya is referring to the rising stock market in recent days and a general calming of macroeconomic fears among investors. That’s according to Edward Moya, senior market analyst at brokerage firm Oanda, who says “Wall Street is enjoying a positive risk-on mood that is good news for cryptos.” He says the crypto market is starting to look “attractive now that the economy is looking a little better as expectations for Fed tightening eased.” If bitcoin’s price stabilizes over the next two weeks, the prolonged crypto bear market - also known as crypto winter - could end as quickly as it started.
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