Bitcoin Pares Earnings. Why the next few days could bring more volatility.

[ad_1]

Text size

Bitcoin is likely to move in step with stocks as key US economic data is released this week. The time of dreams

Bitcoin and other cryptocurrencies took a break on Wednesday, paring gains from a rally that took digital assets to the highest levels in months. But next week contains key macro catalysts that could see cryptos take another big leap.

The price of Bitcoin lost less than 1% in the past 24 hours to hit $22,700. The biggest digital asset has fallen back from the peak of its recent rally to nearly $23,500, after charging more than 30% more in two weeks to levels not seen since before the collapse of crypto exchange FTX does not shake the market in November.

The market recognizes that there probably isn’t much fallout left from the collapse of FTX. The worst seems to be over. This collapse was such a surprise that it triggered a wave of panic selling and, in turn, sent crypto prices well below what they should have otherwise been valued, said Bob Ras, co- founder of the Sologenic blockchain network. We could go lower from here, I must caution, but the momentum is definitely the other way.

Now, important macro-catalysts await us. Cryptos and equities have become more correlated over the past year, with high inflation, rising interest rates and recession risks putting pressure on all risk-sensitive assets.

Bitcoin, like the Dow Jones Industrial Average and S&P 500, is poised to react to fourth-quarter U.S. gross domestic product (GDP) numbers due Thursday as economic growth remains strong. The Personal Consumption Expenditure (PCE) index, the Federal Reserve’s preferred gauge of inflation, will be the focus of attention on Friday as investors brace for the central bank’s next monetary policy decision on February 1st.

Beyond Bitcoin, Ether, the second largest crypto, fell 4% to $1,550. Smaller cryptos or altcoins were also bearish, with Cardano and Polygon each losing more than 5%. Memecoins were in similar shape, with Dogecoin and Shiba Inu both down almost 6%.

Write to Jack Denton at [email protected]

[ad_2]