Many times, macro market sentiment affects crypto prices, but yesterday, it seems like the opposite happened. I won’t dive too deep into it, but traditional markets had a strong risk-off session.
What a difference a day makes! Bitcoin rallied hard today, with prices back to the key $42,000 level. Once support, this level will now act as resistance for a re-energized market. With the continuous selling seemingly behind us, we are left wondering: What actually happened?
The key $42,000 level was swept aside by the bears as selling pressure finally broke the auto-liquidations engines and saw $8B of crypto longs evaporate. The net effect? over $500B was wiped off the total market cap of the cryptosphere as Bitcoin dominance briefly moved from 40% back to 45%.
Traditional markets traded muted yesterday, with bonds slightly sold and the 10-year yield pushed a tad upward. Equities closed flat or barely down, holding up the recovery sessions seen at the end of last week. Gold might be the highlight, falling upon opening, only to close 1.5% higher, at $1,865.
Taproot is the first significant upgrade to the Bitcoin blockchain since 2017, aiming to bring improvements in privacy, security, and scalability. So what can we expect from the changes?
Bitcoin has, so far, managed to maintain price action within yesterday's price range. The early rally has been met with selling, and prices are currently resting above the key support level of $42,200. We are at a crossroads: Its next move, either below $42,000 or above $47,000, is going to be big news.
It’s an interesting time to be looking at crypto markets and traditional markets. Unfortunately, for now, the former really is underperforming.
Welcome to the Weekender: Your weekly round-up of all the top news stories, as chosen by you, our readers. Amazingly, and quite rightly, none of you gave Elon Musk any attention, which is more than can be said for the Bitcoin price, but such is the noise in price action. So, the biggest news of the week?
We’re seeing nearly predictable market moves. After three days of decidedly bearish sessions, equities finally paused and recovered some of the previous session’s losses. The S&P, the Nasdaq, and the Dow all rose around 1%. Bonds were also bought, pushing the 10-year yield back below 1.7%.
This morning won’t feel great to holders of risk assets.
Today feels less than jovial, both in traditional and crypto markets. In the former, rising bond yields and rampant inflation fears sobered elevated valuations, pushing equity indexes lower. In the latter, probably affected by the general risk-off sentiment, selling took place as well.
With commodities prices rising—essentially shortages in raw materials and semiconductors—the idea that production might slow down, that inflation might pick up, and that recovery might not be as smooth as we had hoped for, is weighing on investors' minds. The Dow gapped down almost 1.5%, and the S&P and Nasdaq also fell. Yields, on the other hand, are picking up.
From time to time, we mention commodities, but these days, they are the highlight. With rising prices in copper, iron, crude, and lumber, the idea that inflation is coming pervaded the minds of investors. Bonds were sold, pushing the 10-year yield back above 1.6% and, as we’ve seen happen before, tech stocks suffered most. The Nasdaq fell almost 2.5% and the S&P lost over 1%.
Despite truly disappointing jobs numbers on Friday, markets ended on an upbeat note. The S&P rose to fresh new highs, above $4,230. The Dow hit records too, at $34,777. Tech stocks are a distance away from all-time highs but up on the session. Interestingly, gold is also marching on and up, now at around $1,835.