Blockchain of shattered dreams
Crypto traders have walked a lonely road that no one knows how far it will go. Wall Street has been keeping a close check on the cryptoverse’s vital signs and the good news is that it’s still alive. Bitcoin’s shadow isn’t the only thing rallying today as US stocks rebound after a disastrous week of trading sent it into bearish territory.
For a very long time, it seems like bitcoin holders have walked the boulevard of shattered dreams. The latest part of this historic dip in crypto was not just a time of de-risking on Wall Street as many traders are starting to have very bad feelings about the economy, but much of the markets in crypto is experiencing strains, including blockchain investments. Soaring borrowing costs, margin calls and excessive leveraged speculation have contributed to accelerating selling pressure over the past two weeks. The broader cryptocurrency market is seeing some buyers emerge as the selling pressure may have been exaggerated.
The crypto is not going away and some investors are beginning to believe that further declines may be limited.
After a long weekend and the worst week of trading in nearly two years, US stocks rebounded as investors expect the Fed to be reluctant to tighten policy more aggressively, dampening calls of an impending recession. . Wall Street hears a chorus of central banks (RBA, ECB and Fed) saying they will raise rates to fight inflation, but the hope remains that they will be reluctant to send their respective economies into an immediate recession.
Another round of economic data has confirmed the slowdown that is happening across the economy, but a complete collapse in activity is clearly not happening. US existing home sales for May show the housing market is rapidly cooling as rising borrowing costs and a weaker consumer weigh on demand. These oversized rate hikes will cause problems for the housing market and could lead some to believe that the Fed will not continue to tighten policy aggressively later this year.
The Chicago Fed’s National Activity Index for May showed a rapid deterioration in economic activity. The sales and employment components remained positive, but did not necessarily provide optimism that weaker growth trends will change anytime soon. Sales turned positive after three consecutive negative readings, so many weren’t surprised by the slight rebound.
This article is for general information purposes only. It is not investment advice or a solution for buying or selling securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for everyone. You could lose all your deposited funds.