Stock market panic sinks cryptocurrencies: Watch out for what may come next
Investor fear shifted this Monday to the cryptocurrency sector, with major assets like Bitcoin and Ethereum plummeting by more than double digits.
"Cryptocurrency prices are falling, but indicators suggest we are close to bottoming out," says Simon Peters, a cryptoasset expert analyst at eToro. Uncertainty in financial markets is a constant that can challenge even the most experienced investor. Factors such as global economic fluctuations, unexpected political changes and the inherent volatility of emerging markets can create an uncertain and difficult-to-predict environment. In a context where every move and decision must be meticulously calculated, having advanced analysis tools, such as InvestingPro, becomes an indispensable advantage to navigate the rough sea of financial uncertainty and help reduce risk while seeking to maximize returns.
"Risk assets plummeted during Monday's session in Asia, as a weaker U.S. employment report and higher unemployment rate on Friday, as well as a rise in the Japanese yen following the recent interest rate hike by the Bank of Japan, caused investors to flee risk assets," Peters notes.
According to this expert, "continuous fears that the defunct crypto exchange Mt.Gox will reimburse its creditors and that Jump Crypto will liquidate hundreds of millions of dollars in cryptoassets, especially Ethereum, have contributed to the massive sales in crypto markets."
"However, technical indicators now appear oversold, as well as the crypto fear and greed index, which blinks 'Fear,' typically a sign of a price bottom, so it's possible we could see a bounce from here in the coming days. To know how high the price can rebound, we will have to wait and see," asserts Peters. Key Points
"The recent sharp drop in both cryptocurrency and stock prices over the past few days can be attributed to a mix of macroeconomic and crypto-specific factors, although the former seems more influential at the moment," agrees Javier García de la Torre, Country Manager of Binance Spain and Portugal.
"Speaking specifically about cryptocurrencies, the widespread market decline driven by recession fears has led to capital reallocation away from higher-risk assets, with digital currencies still largely perceived as such. This movement has been exacerbated by the recent dynamics of the U.S. presidential race, which some market participants see as potentially less favorable for cryptocurrencies as an asset class. Lastly, in the cryptocurrency market, the summer months have historically been slower than other months of the year, with systematically lower returns. It’s possible this seasonal dynamic is also playing a role here," adds García de la Torre.
"Despite these challenges, we do not see this as indicative of a long-term negative trend for the cryptocurrency market. The Federal Reserve is expected to cut interest rates in September, which should improve the outlook for the U.S. economy," García de la Torre emphasizes.
"Furthermore, as there is still some time until the presidential elections, there remains significant potential for market fluctuations. As the elections approach, it is likely we will witness market impacts in both directions, as candidates clarify their stances on cryptocurrencies," concludes the Binance expert. Imagine having the ability to anticipate market movements before most, thanks to expert analysis and customized alerts that are only available to InvestingPro premium users. These advantages not only allow you to mitigate risks, but also capitalize on opportunities with an accuracy that previously seemed unattainable. In a financial world where correct and timely information is key, being an InvestingPro premium user puts you in an advantageous position to efficiently navigate through uncertain times and maximize your profitability.
Source: Investing.com
