Although Bitcoin stock and other cryptocurrencies saw losses on Monday, their prices have remained stable above significant levels following a gain the previous week. Due to the fact that the past few days have been jam-packed with decisions from central banks, earnings reports from corporations, and economic data, digital assets may be primed for volatility.
Over the past day and a half, the price of Bitcoin stock has decreased by 1%, landing at $20,500. Since the beginning of September, the most popular cryptocurrency had been trading primarily within the region of $19,000 and $20,000. However, a rally that took place the previous week lifted the token above that range to levels at which it now looks to have stabilized.
A busy week is ahead for investors, which might bring even more volatility to cryptocurrencies and pose a risk to Bitcoin, which is now hovering near the highest consistent levels since the beginning of September.
In 2022, cryptocurrencies have become highly connected with stocks, despite the gloomy macroeconomic environment of high inflation, rising interest rates, and the possibility of a recession. Bitcoin, in particular, has been moving in tandem with the Dow Jones Industrial Average and the S&P 500. The Federal Reserve’s dramatic shift to fighting inflation with tighter financial conditions, including significantly higher interest rates, which dampen the demand for risk-sensitive assets like cryptocurrencies has been a particular source of pressure. This dramatic shift came about as a result of the Fed’s decision to fight inflation with tighter financial conditions.
This is the reason why this week’s meeting of the Federal Reserve’s monetary policy committee on Tuesday and Wednesday looms so large. The Federal Reserve is widely anticipated to implement a super-sized increase in interest rates for the fourth time since June. However, the focus will be on any comments made by Chairman Jerome Powell regarding when and how the Fed may soon pull back on its aggressive policy of monetary tightening. Investors are hoping for reassurance from the Fed that the worst of it is over, therefore it is extremely possible that stocks and cryptocurrencies will move in response to the decision that will be announced and the press conference that will follow.
Earnings reports from companies are another factor that could cause volatility in the stock market and spread to the cryptocurrency market. The industry will be particularly interested in hearing about the performance of Robinhood Markets (HOOD) on Wednesday and Coinbase Global (COIN) on Thursday. Both platforms, as well as major crypto trading venues, have been experiencing a slowdown this year, which has led analysts to be skeptical about their performance.
The week will come to a close with economic statistics on Friday in the form of the United States jobs report. In light of the Federal Reserve’s shift toward a more hawkish stance, investors have been closely monitoring leading signs of the strength of the economy. Because the Federal Reserve continues to work toward its goal of achieving a “soft landing,” in which inflation is brought under control without plunging the economy into a downturn, any indication that the economy is beginning to show signs of slowing could cause the Fed to modify its plans for the future.
Featured Image- Unsplash @ André François McKenzie