
Watch Out for What May Come Next – By Investing
Investor sentiment shifted significantly this Monday towards the cryptocurrency sector, with key digital assets experiencing significant declines exceeding 10%.
"Prices in the cryptocurrency market are dropping, but indicators suggest we may be nearing a bottom," states Simon Peters, a cryptoasset expert at eToro.
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During Monday’s trading session in Asia, risk assets experienced sharp declines. This was influenced by a weaker U.S. employment report released on Friday, which noted a higher unemployment rate, along with a rise in the Japanese yen following the recent interest rate hike by the Bank of Japan. As a result, investors moved away from riskier assets, according to Peters.
He also pointed out that ongoing concerns surrounding the recovery of creditors from the defunct crypto exchange Mt.Gox and the potential liquidation of hundreds of millions in cryptoassets by Jump Crypto, particularly Ethereum, have intensified sell-offs in the market.
"However, technical indicators now seem oversold, and the crypto fear and greed index currently signals ‘Fear,’ which often indicates a price bottom. This suggests a possibility for a rebound in the coming days," Peters asserts.
Market Overview
"The recent sharp decline in cryptocurrency and stock prices can be attributed to a combination of macroeconomic and crypto-specific factors, although the macroeconomic issues appear to dominate at this time," agrees Javier García de la Torre, Country Manager for a major cryptocurrency exchange in Spain and Portugal.
He elaborates that the overall market downturn driven by fears of recession has prompted a reallocation of capital away from higher-risk assets, of which cryptocurrencies are still widely considered. This situation has been intensified by the current dynamics of the U.S. presidential race, which some market participants perceive as potentially less favorable for cryptocurrencies. Historically, the summer months have also been sluggish for the cryptocurrency market, typically yielding lower returns, suggesting that seasonal dynamics may play a role.
Despite these challenges, García de la Torre does not view the current market conditions as indicative of a long-term negative trend for cryptocurrencies. He highlights expectations that the Federal Reserve will cut interest rates in the near future, which could improve the economic outlook in the U.S.
Moreover, as the presidential elections draw near, significant market fluctuations are expected. Candidates’ positions on cryptocurrencies could sway sentiments positively or negatively, leading to potential impacts on the market.
Strategic Insights
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