Due to the fact that larger cryptos aren’t able break through key resistance points, the market for cryptocurrency is in tight control. The sector has been mostly inclined to the downside since September when Ethereum completed “The Merge”.
Bitcoin (BTC), which trades at $19,000. It made a 2% profit during the last 24 hour, while Ethereum recorded a 3% profit. Other cryptocurrencies follow a similar trajectory during today’s trading session with XRP and Cardano amongst the worst-performing assets in the sector.
Crypto and Global Markets Near A Bottom But Not A Bull
The successful completion of “The Merge” left the crypto market without a narrative of its own. The nascent asset category has moved in sync with major indexes and traditional equities.
The price movement in risk-on asset, including crypto, has been dominated by macroeconomic forces, while the U.S. Federal Reserve (Fed), rushes to lower inflation. This financial institution raised interest rates, triggering a bearish market which has rippled throughout the financial sector.
Every market participant would like to know the day when crypto will bottom. This is possible only if equities find a bottom.ccording to Jurrien Timmer, Director of Macro for Fidelity, this might be close to happening.
Timmer made the comparison via his Twitter account to compare the current inflationary situation to those of the United States in 1940-1947. Inflation was high in North American after World War II.
Timmer called this situation a fiscal/monetary combination. It was a country that was going through a significant conflict, with the rest of the world still in chaos, and suffering from massive expenditures and low resource. At that time, the S&P 500 saw a 30% decline.
This index, which follows the same trajectory as its predecessors, is currently nearing those lows. As seen in the chart below, the S&P 500 proceeded to move sideways for multiple years as inflation peaked at 19.6%. In comparison, today’s inflation stood at 8.9% at its highest month-to-month metric. Timmer said that:
In 1946-1949, the bear market saw a 30% nominal drop and 46% real fall (amid inflation of 20%). The entire market was driven entirely by valuations. Although we’re near the bottom of the market, the analog still suggests that there is a way to go.
Andere experts expect Similar scenarios could be seen for Bitcoin and other crypto markets. For long-term investors who are looking to build wealth at the current level, this could be a positive sign. However, it is not good news for anyone betting on a bull run in 2022 and 2023.