Slow start to week for crypto as China lockdowns weigh on stocks, S&P 500
Major stock markets in Asia have fallen significantly in recent months, and bitcoin has followed a similar trend.
Hello. Here is what happens:
Prices: During a slow but surprisingly volatile session, bitcoin fell to a six-week low around $38,200 before rapidly rising above $40,000.
Knowledge: Crypto had a slow start to the week in Asia amid lingering fears over COVID-19 lockdowns in China.
Technician’s opinion: BTC’s price range could persist for another week.
bitcoin (BTC): $40,485 +2.4%
Ether (ETH): $3,016 + 3%
|Ethereum||ETH||+2.1%||Smart contract platform|
The best losers
|Cosmos||ATOM||−2.5%||Smart contract platform|
|Classic Ethereum||ETC||−2.4%||Smart contract platform|
Bitcoin is recovering after hitting a six-week low.
By Angelique Chen
Bitcoin (BTC), after a sharp price swing over the past week, traded earlier Monday at its lowest point since mid-March but recovered quickly.
At press time, the largest cryptocurrency by market capitalization was up 2.4% in the past 24 hours, trading at $40,485. Earlier, bitcoin price fell to $38,202, the lowest in almost six weeks.
“Recent volatility has been fueled by factors such as inflation, the Ukraine crisis as well as tight monetary policies,” said Daniel Khoo, research analyst at Nansen. “This has affected not only the stock market, but also the crypto market, which seems to be following in tandem recently.”
Khoo said the price drop could be driven by short-term negative sentiment as people take risks on volatile assets. “Many investors are also looking to [stablecoins] given the uncertainty and short-term bearish outlook as the market has gotten too hot and periods of extreme euphoria have been followed by market corrections historically,” Khoo said.
Ether (ETH) rose 0.87% in the past 24 hours, trading at $2,972. US stocks were mixed as China’s Covid restrictions tightened, with the S&P 500 index down 0.7% and the Nasdaq up 0.2%.
S&P 500: +0.6%
Gold: $1,899, -1.8%
Slow start to the week for crypto in Asia
Bitcoin’s correlation with the stock market has created a circular economy with China – even though trading in the asset is officially banned in the country.
As shutdowns continue in Shanghai with possible expansions elsewhere, the CSE 300, a benchmark of China’s 300 largest stocks, fell 3% while the Hang Seng Index, Hong Kong’s stock index , fell 2%.
Year-to-date, the Hang Seng index is down almost 15%, the CSE 300 down 22% and the SP 500 down 11%.
Hang Seng, other indices (TradingView)
This continued decline in Chinese stocks has now reversed the gains made in March when the government pledged to support the market to combat the double whammy of US threats to delist Chinese stocks and lingering COVID-related fears. -19.
The S&P ended last week down 2.7%, in part due to China’s uncertain macro environment.
Bitcoin, in turn, fell 1% during Monday’s Asian trading day and fell further throughout Monday’s trading in the United States. At the time of writing, it was up 2.4% to $40,485.. Metaverse major Axie Infinity shed 10% in value during Monday’s trading in Asia while NEAR and NEO, the tokens associated with layer 1 blockchains, fell 10% and 9.3%, respectively.
So while the stock indexes of the world’s largest economy nervously watch those of the world’s second largest to see how this next and hopefully final chapter of the coronavirus unfolds, bitcoin is caught in the middle.
It’s a reversal, mind you, from March, when Chinese markets were rising and US stocks were flat. Bitcoin hasn’t followed the trend as it trades in response to the US move – but now China’s ‘circular economy’ that is dragging the US market down has in turn dragged bitcoin down this session.
Bitcoin (BTC) is stabilizing after falling 3% over the past week. Short-term buyers have rallied back around the $37,500 support level, although resistance at $43,000 may block a rise in price.
Momentum signals remain neutral on the charts, which usually precedes a period of price movement within a range, similar to what happened between May and July of last year.
BTC is about two weeks away from recording a bullish countertrend signal, according to DeMARK indicators. If confirmed, buyers could start accumulating ahead of a seasonally strong period in May.
Still, the bearish signals on the monthly chart suggest a limited upside for BTC beyond the $50,966 resistance level.
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