Original Source: CNN, Business InsiderOriginal Authors: John Towfighi, Jennifer Sor
Bitcoin and stock markets are experiencing dramatic volatility—Investors say more turmoil may follow.
Bitcoin and stock markets are experiencing dramatic volatility—Investors say more volatility may follow.
... Since hitting a record high in late October, the tech-heavy Nasdaq has fallen 6.6%, wiping out approximately $2.6 trillion in market capitalization. The VIX, Wall Street's fear gauge, surged 10% on Tuesday. CNN's Fear & Greed Index hovered in the "extreme fear" zone and fell to its lowest level since early April. "Bitcoin is struggling due to selling pressure from long-term holders taking profits, as well as uncertainty surrounding Federal Reserve policy, liquidity conditions, and other macroeconomic factors," said Gerry O'Shea, global head of market insights at Hashdex Asset Management. To make matters worse, the uncertainty surrounding whether the Federal Reserve will cut interest rates next month is putting pressure on highly speculative and volatile assets like Bitcoin due to the resulting risk aversion. ActivTrades analyst Carolane De Palmas stated that if the Fed cuts rates less than expected, investors are already pricing in this scenario, which would be negative news for risk assets like Bitcoin. “Bitcoin’s pullback is part of a broader shift in risk sentiment,” said Haider Rafique, global managing partner of cryptocurrency exchange OKX. In fact, Bitcoin has struggled to achieve a substantial recovery since the flash crash triggered by US President Trump’s resumption of the trade war with China on October 11. Peter Chung, head of Presto Research, said that some buyers and sellers subsequently exited the market, leading to reduced Bitcoin liquidity and increased price volatility. This is because investors are optimistic that the Trump administration will introduce regulations favorable to cryptocurrencies. Trump strongly supported the cryptocurrency industry, the government relaxed regulations, and advocated for legislation favorable to cryptocurrencies. The GENIUS Act, passed by Congress and signed into law by Trump in July, ushered in a new era of stablecoin regulation. Against this backdrop, despite pressure on tech stocks, investors bought on dips. Nvidia shares fell as much as 3.36% on Friday, ultimately closing up 1.77%. Nvidia shares fell as much as 3.08% on Monday, ultimately closing down 1.88%. Some cryptocurrency investors remain optimistic. Bitcoin fell to a low of around $74,500 in April but surged above $126,000 in early October. BitMEX co-founder Arthur Hayes is even more optimistic, believing that Bitcoin may first dip to $80,000 to $85,000 before rising to $200,000 to $250,000 by the end of the year. She wrote in a report on Monday that if Bitcoin closes below that threshold for two consecutive weeks, it would "signal a worrying collapse." This is the kind of platform that shut down due to financial difficulties. Founders Skirmantas Januškas and Dragos Dunica stated, "In the current environment, operating a platform of this size is economically unsustainable." Currently, Bitcoin is trading at $91,398, and ETH at $3,075.