Bitcoin and other cryptos are sinking again. Don’t expect a rebound soon.

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Bearish sentiment is growing in cryptocurrencies such as Bitcoin and Ether, as investors assess the Omicron variant and other new macro risks. OZAN ​​KOSE / AFP / Getty Images

Bitcoin and other cryptos sank on Monday as investors continued to worry about a worsening macroeconomic climate, tighter monetary policies and an economic slowdown linked to the Omicron variant.

Bitcoin was down 8.7% on Monday to around $ 46,000. Ether, the coin of the Ethereum blockchain network, fell 11% to $ 3,700. Many alt-coins were doing less well, including Solana, down 13%, and Terra, down 14%.

Bitcoin is now down more than 30% in 35 days, and is down almost $ 23,000 from its early November highs of around $ 69,000. Additionally, the technical setup involves further lows with crypto breach support levels.

“The trends remain bearish in the near term and the momentum has not shown sufficient evidence of stabilization in a way that should allow a rebound just yet,” Fundstrat Global Advisors wrote in a note Monday morning.

Fundstrat expects Bitcoin to trade over the next four to six days as it has broken recent lows of around $ 47,660. His next test level will be $ 41,634.

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Ether also broke a significant support level of $ 3,900. “Any breakout of $ 3,900 makes short-term bearish trends leading to $ 3,521 initially,” Fundstrat said, “So it’s quite important that ETH maintains support in this most recent new test.”

Some of the weakness in crypto may be due to short-term momentum factors. Since mid-October, the supply of Bitcoin held by short-term holders has increased by more than 330,000 coins. Some of that new money may be leaking. More than $ 3 billion in long positions have been liquidated from global stock exchanges since December 1, according to data from Coinglass.

Open interest in Bitcoin futures is also down, down 4.1% in the past 24 hours, worth $ 17.2 billion in contract value. Inflows to crypto funds tend to decline, falling to $ 88 million last week, from $ 184 million the week before, and well below the $ 306 million in inflows the week of November 29, according to CoinShares.

The upside of liquidations and cash outflows is that traders are pulling out in anticipation of another higher rebound. But that implies a larger appetite for risk, which can be hard to swallow now.

More than a dozen central banks are meeting this week to reassess monetary policies and interest rates, including the Federal Reserve, which is due to meet on Tuesday and Wednesday. The market is clearly on the verge that Fed Chairman Jerome Powell could turn more hawkish, indicating that the Fed will cut its $ 120 billion in monthly bond purchases sooner than expected – a precursor to raising rates earlier than expected as well – now slated to start in June 2022.

Tech stocks sold on Monday on the prospect of higher rates, eroding the present value of future cash flows. The bond market appeared more concerned with slowing economic growth, with the yield on 10-year Treasuries sliding to 1.43% from 1.49%.

Cryptos can be caught in the middle. The market suffers as investors bank on less liquidity, slower economic growth, and a tougher outlook for all “risky assets” in 2022. If there is a flight to safety, crypto is unlike really at a port.

Write to Daren Fonda at [email protected]

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