Crypto prices declined from the weekend as market participants prepared for the week of economic events & data and more earnings announcements.
Most cryptocurrencies noted declines over the weekend, with investors preparing for what might be a choppy week, awaiting Federal Reserve’s July meeting, another possible massive hike, and more notable economic events later on the week.
The previous 24 hours saw the leading cryptocurrency, Bitcoin, losing around 2.6%. For now, BTC trades shaky beyond the $21K level. That saw the altcoin on cuts, Ethereum losing over 3% as the meme coin Shiba Inu dropped 3.5%.
Like most risky assets and tech stocks this year, cryptocurrencies took a blow as inflation soared and the Fed rapidly hiked the benchmark lending rate and funds rate. Risky investments deteriorate amidst surging rates as safer assets see surged yields, requiring more from returns and earning from growth assets.
Market players expect another 75bop fed funds rate surge during Fed’s rate-adjusting meeting on Wednesday. Meanwhile, investors will focus on clues from the Federal’s comments and their economic stance, plus future rates in 2022. More hawkishness by the Fed would trouble the stock and crypto spaces. Nevertheless, asset prices could react favorably if Fed appears comfortable with inflation status and future economic projections.
Besides the earnings reports, Thursday will see another massive event that might affect the crypto and overall marketplace. The US BEA (Bureau of Economic Analysis) will reveal GDP estimates for Q2 2022.
Meanwhile, the first quarter saw the US GDP declining by 1,6% after soaring approximately 7% during 2021 Q4. Two consecutive quarters of downside GDP technical suggests a recession. Goldman Sachs (early this month) had trimmed its Q2 GDP estimates to around 0.7%, which would see the US barely escaping a technical recession.
The crypto prices might resort to either direction in the short term. A better-than-anticipated GDP growth in the second quarter plus a less hawkish Federal might mean the Fed can control inflation and ensure a softer landing. However, more hawkishness and weak economic figures might trigger downside movements. Savvy investors still see long-term value in BTC and ETH due to their real-world utility. Meanwhile, Shiba Inu might suffer as it lacks a fundamental or technical investment thesis.
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