Markets Awaiting The FOMC as Possible Recession Looms | Daily News 15/6/22
Bitcoin took a slight breather 😮💨 yesterday after its almost 20% drop on Monday but as of writing, is making another move further to the downside; sitting currently at just over $21,000. The whole of the crypto market is watching how Bitcoin will react to the FOMC announcement later and we are waiting for the decision on the possible interest rate hike to 75bps! More on this further in the article 📖.
BTC sits at a very critical level right now and eyes from all economic markets are watching it closely 🧐. Its price has almost stabilised in comparison to its recent crumbling on Monday due to these inflation fears, but yet traders, investors and analysts alike are remaining bearish. Usually, we tend to bring you a TA (technical analysis) perspective also with our daily news - however, we feel today will be all about the global narrative and that’s what all are waiting for!
The bitcoin fear and greed index (a measure of sentiment around Bitcoin, calculating statistics to gauge if there is too much fear or too much greed in the market) has reached a level so low, that we haven't seen in over 2 years since early 2020!
The biggest point many are looking at now is for the price to roll down to 2017’s all-time highs of just under $20k 🔴 where many long-term buyers may return to the market, although this is based on providing that the macroeconomic sentiment improves!
Here we can see the ATH of 2017, the $20k support level and where we currently are! Will we break it down further? Today will tell us a bigger story.
What Can We Expect For BTC?
- If the market reacts negatively to the FOMC announcement, we could see BTC drop under the $20k level which is not an ideal situation for Bitcoin 🔴
- The idea now is to sit and wait before making any decisions or strategies
- If BTC can hold its level, then we could see strong support and some buying pressure increase in the next day or so ⬆️
Altcoins across the board are also lying in wait, in anticipation ultimately of how the global macroeconomic direction will play out today in response to the possible increase of interest rates. Ultimately, alts will generally follow the direction of Bitcoin although with varying results.
For instance, let's look at Ethereum! Ether is currently sitting at just over $1100 underperforming Bitcoin by about 33% in over a month. The psychological price to keep an eye 👁️ on is of course the rounded-down number of $1000. If ETH drops below this, we can expect further downside.
What about the other alts and their performance in the last 24 hours?
🟢🔴 Chainlink (LINK) and Polkadot (DOT) have been the better performing altcoins out of the lot, however, both are still in the red, with LINK dropping in price by just under 3% and DOT about 2.6% in the last 24 hours.
As for the worst-performing alts, Tron and Polygon have taken the worst brunt of this downturn!
🔴 Tron (TRX) is down by over 20% in the last 24 hours, being one of the worst-hit altcoins. The main factor to this extreme decline in its price is the decline in confidence in the project as their stablecoin USDD de-pegged again sitting at 0.96 cents; despite a $2B cash injection. Many fear a Terra/UST moment may come again!
🔴 Polygon (MATIC) has also been hit fairly hard having dropped more than 12% in the last 24 hours despite bullish news of ‘Derby Stars’, a play-to-earn game being announced that it's moving to the Polygon network.
💼 Many tech companies that expanded during the pandemic are now being rocked by layoffs and job offer retractions as the industry faces its biggest downturn in two decades. According to Layoffs.fyi which tracks job cuts in the industry, tech companies have laid off a total of 35,000 workers worldwide so far this year. This is due to the global economy slowing down, affecting unemployment rates which in effect will lead to less spending, especially on assets like crypto!
🗠 The months-long slide for the S&P 500 index has officially thrown stocks far off their all-time highs to now be considered a bear market! Since the start of 2022, the S&P is down over 22% with companies like Amazon and Google leading the drop with 39% and 27% respectively. This problem has been worsened by inflation fears and of course, global uncertainty. The NASDAQ continues to follow suit having dropped almost 2% today just like the S&P 500 - but as with the rest of the markets, the FOMC announcement is what investors are keeping their eyes open for.
💲 The US Dollar Index (DXY) opened lower around 105.30 as investors are bracing for the possible rate hike later today of 75bps by the Fed due to the mix of price pressure and a tight labour market. We haven't seen highs of this level for 20 years, and if the strength of the dollar increases, this will mean less $ for bitcoin because investors will be less likely to want to put their hard-earned dollars in riskier assets; especially in these uncertain times.
🏠 Mortgage rates in the US jumped sharply this week also due to the fears of increased rate hikes. The average rate on a 30-year mortgage in the states is now 6.28%, only 5.55% a week ago! This has completely crushed home affordability due to the higher home prices and rates. Again, this is just another factor that could see funds leave the traditional markets as saving and safe havens become the norm over investing and trading.
- The crypto markets (as well as traditional markets) are all slightly down today and awaiting the FOMC announcement regarding interest rate hikes.
- Bitcoin is at a critical level, hovering over $20k. Will it break below?
- Job cuts are on the increase, mortgage rates are up and the equities market is down. Recipe for inflation?
- The US dollar 💲 is lying in wait. Could it reach higher highs? The crypto market is hoping for the opposite.
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