Bitcoin and ethereum sink as sentiment shift in markets

Bitcoin and ethereum is suffering the sharp turn of sentiment in the markets after the minutes of the US Federal Reserve. The feeling has veered towards a greater risk off (risk aversion) generating significant falls in risk-linked assets such as stocks or cryptocurrencies themselves.

Bitcoin corrects more than 7% and falls to the lowest level since its sudden collapse in December, amid growing expectations of an increase in interest rates that could weigh on some of the best-performing assets in recent years, as explained from Bloomberg.

Ethereum, meanwhile, it sinks to 11% and falls to $ 3,354 per unit. The rest of the cryptos with the highest capitalization also correct with intensity: Cardano about 9%, Solana 12%, Dogecoin 7.5% …

Returning to the largest cryptocurrency by market value, its price has fallen as low as $ 42,505 in early Asian trading on Thursday. Now it presents a slight recovery that leaves the crypto at $ 42,700. Bitcoin has appreciated approximately 500% since the end of 2019 in the wake of stimulus measures implemented during the covid-19 pandemic.

“Given the current macro context, the leverage within the bitcoin market and the recent strength observed in the bitcoin market altcoins, we think it’s appropriate to overweight Ethereum and other smart contract platforms, “Fundstrat digital asset strategists Sean Farrell and Will McEvoy say in a note Wednesday.” We probably wouldn’t bet the short-term farm on bitcoin, but we think there is. an opportunity to maintain long-term volatility through derivatives strategies. “

The recent shifts in cryptocurrencies come amid a volatile period for financial markets. The rebound in inflation It is leading central banks to tighten monetary policy, threatening to reduce the liquidity tailwind that lifted a wide range of assets.

A risk asset

“The Fed is aggressive,” said Stephane Ouellette, CEO and co-founder of crypto platform FRNT Financial. “Sudden reactions in cryptocurrencies tend to be similar to risk-only assets despite long-term trends around inflation, store of value, etc.”

Bitcoin had hit a new high at $ 69,000 in early November after US regulators allowed exchange-traded funds based on Bitcoin futures.