It is a year of pump-fakes for all asset classes, and Cryptocurrencies could not sustain the pressure.
Just last week, one could have imagined that Cryptos were isolated from the anxiety dampening global assets – but it was too soon to assume that things were going to be so simple.
Markets are intercorrelated, and depending on where they stand on the risk spectrum, assets can react differently to pessimistic events.
And the bearish turn that took over Markets since the rise of inflationary fears has swept virtually everything on the risk spectrum, from safe havens (as seen in Bonds and Metals) to riskier Equities and Cryptocurrency Markets.
When the common denominator, the US Dollar, shines, everything hurts – With Crude and general energy prices increasingly pressuring all sides of the global economy, it is difficult to find a sustainable hedge.
While Cryptos offer diversification from traditional asset movements, they are also highly sensitive to the gravity of risk aversion – Bitcoin attempted to push above its $75,000 major psychological level shortly after the 20 million BTC issuance, but also dragged the entire asset class down when it failed to form a breakout above.
The issue with today’s session, particularly, is that selloffs are gripping higher-beta assets even harder, as seen in the Nasdaq’s 2% plunge, and altcoins just can’t resist.
Uncertainty should drag into at least tomorrow and, most probably, also towards the weekend.
At least, Crypto markets aren’t closed over the weekend, so if the Trump Administration really attempts to end the war, they will be the first to react.
The harder part, however, is that weekend moves, if anything happens during that time, tend to see the largest corrections.
