Market update

It looks like it’s time to fill out that McDonald’s job application with crypto falling off a cliff this week. Bitcoin tumbled around AU$12K four days ago from AU$55K down to AU$43K (the lowest prices since July 2021) alongside a major sell off in stocks, with the tech heavy Nasdaq in the US down another 4.3% on Monday and 26% year to date. Crypto’s market cap is down 35% in the same period and Bitcoin is now more than 50% off its all time high. The Future Fund LLC’s Gary Black tweeted today “BTC is nothing like gold, it’s Nasdaq on steroids“. Bitcoin has completed six red weekly candles in a row for the first time since 2014. Interest rates are rising along with the US dollar and the US CPI figures come out mid-week which will indicate how much more pain is to come. Crypto’s plunge was exacerbated by the UST stablecoin falling off its peg and deploying some of its BTC reserves. At the time of writing Bitcoin was down 19% for the week to trade at AU$44,415 (US$30.7K), Ethereum lost 19% for the week to trade around AU$3,300 (US$2.3K), XRP (-19%), Cardano (-19%), and Polkadot (-25%). The crypto fear and greed index bottomed out at 11, or Extreme Fear.

April wasn’t a great month and May isn’t looking too hot either. Traditional markets are tanking, the Federal Reserve is hiking rates in the US, and the RBA increased the cash rate by 25bps to 0.35% today. The tech-heavy Nasdaq (crypto’s closest proxy on traditional markets) plunged on Friday and lost 13% all up in April, its worst month since 2008 and its worst start to a year on record. By comparison, Bitcoin isn’t actually doing that badly, remaining above its year-to-date low of around US$33K (AU$47K). Bitcoin is currently trading at US$38.6K, or AU$54,650, which is 4% down for the week. Ethereum lost 5% to trade at US$2,865 (AU$4,050), XRP was down 11%, Cardano (-13%), and Polkadot (-18%). As a small sign of hope, the Crypto Fear and Greed Index is at 28, which is simply Fear, rather than Extreme Fear.

Bitcoin has seen four red candles in a row on the weekly chart for the first time since June 2020. Traders seem unsure of how crypto markets will react to heavy losses in Asian stocks over lockdowns spreading in China and the US Federal Reserve signalling a half point rise in interest rates is likely at its next meeting to tame inflation. A looming death cross on the three-day chart could also send prices tumbling 40% according to CoinDesk — but on two previous occasions it notes that marked the end of bear markets and the start of bulls. Despite the gloom, HODLers keep HODLing, with the percentage of Bitcoin supply that hasn’t moved for more than a year crossing 64% for the first time ever. Bitcoin dipped again below US$40K (AU$55.7K) on the weekend and was as low as US$38.5K (AU$53.5K) earlier today but it finishes the week at US$40.5K (AU$56,450), which is down 1% on seven days ago. Ethereum is down 2% to trade around US$3K (AU$4.2K), XRP lost 9%, Cardano was down 5% but Dogecoin was up 10%. The Crypto Fear and Greed Index is stuck on Extreme Fear, at 23.

In the absence of a clear overall bullish or bearish narrative driving the Bitcoin price firmly up or down, the price has been meandering above and below the US$40K mark (AU$54.4K) for most of 2022. Bitcoin dropped below that level a few times this week, but finished up 2% to US$41K (AU$55.7K). Ethereum was up 2% to just over US$3K (AU$4,100). Promising signs in the SEC case against Ripple helped XRP to gain 9%, Cardano was flat and Polkadot gained 4%. The Fear and Greed Index is at 24, or Extreme Fear.

In crypto’s ongoing game of snakes and ladders, we’ve just hit a ladder, with Bitcoin down 8% in the past 24 hours and 18% down for the week to trade around AU$53,500 (US$39,600). The overall crypto market cap is down to AU$2.46T (US$1.82T). Pundits point to Bitcoin’s increasing correlation with equities markets as a possible explanation – the correlation is at the highest point since October 2020 and all the major US markets were down on Monday, with the tech heavy Nasdaq losing 2.2%. The Ukraine war, interest rates, and inflation are weighing heavily and former BitMEX CEO Arthur Hayes thinks it’ll get worse before it gets better, tipping BTC will test US$30K (AU$40.4K) and ETH US$2,500 (AU$3,370) before the end of June.  Ethereum lost 18% this week to trade just over AU$4,000 (US$2,960) and everything else lost ground including XRP (-16.7%), Polkadot (-27%), Cardano (-26%) and LINK (-23%). The Crypto Fear and Greed Index is at 32, or Fear, though expect that to dip further today.

After a shaky first quarter, Bitcoin hit a new high for the year on March 29 around AU$65.6K. Glassnode reports that over the past week a net US$1.5 billion (AU$2B) worth of Bitcoin and US$1.7B (AU$2.25B) of Ethereum departed exchanges, while a net US$451.8M (AU$599M) of USDT flowed in. The Bitcoin price however finished the week down 5% at AU$61,650 (US$46.5K), while Ethereum increased 1% to AU$4,650 (US$3.5K). Cardano was down 2%, XRP lost 8% and Dogecoin also finished flat despite a spike in the aftermath of Elon Musk buying a slice of Twitter. The Crypto Fear and Greed Index is at 52, or Neutral.