The bear market has begun! That is the phrase many are hearing these days. In reality Bitcoin is down about 8%, dropping below $95,000, after briefly returning above the $100,000 level on Monday, amid growing macroeconomic fears.
During the same period, Ethereum suffered an even bigger drop, slipping 12% to under $3,300, while several other major cryptocurrencies also posted double-digit declines.
Earlier this week, the top two cryptocurrencies by capitalisation surged, in the wake of growing market optimism about the new pro-crypto administration.
But what is really going on? Presto Research analyst Min Jung told ‘TheBlock’ that broader markets, including equities, were faltering due to macroeconomic concerns about sustained inflation.
“Not only cryptocurrencies, but both the NASDAQ and the S&P 500 fell yesterday, driven by inflation concerns after ISM data revealed faster-than-expected growth in the US economy. This raised fears of persistent inflation, [leading] to a surge in bond yields, with the 10-year Treasury reaching its highest level since April.”
BTC Markets cryptocurrency analyst Rachael Lucas also attributed the high volatility to fears of higher interest rates for a longer period, following December comments by Federal Reserve Chairman Jerome Powell.
Upcoming economic events, such as the release of the latest FOMC meeting minutes, consumer price index data and non-farm payrolls, will influence market sentiment in the coming days.
And then there is Trump. Yes, because Donald Trump’s imminent inauguration, scheduled for 20 January, is expected to cause volatility. Naturally, most retailers are hoping for a positive market direction after this date, with a continuation of the bull market trend.
