Global recession fears, a stronger dollar, higher interest rates, and soaring bond yields are adding pressure to crypto markets.
Since crypto markets move in tandem with global stock markets, continued volatility in US markets has also cast a shadow over cryptocurrencies.
The three main indexes of the American markets like the Dow Jones, the NASDAQ Composite and the S&P 500 have lost between 19 and 30% so far this year.
Therefore, the promise of further rate hikes proclaimed by the US Fed through 2023 is also expected to keep crypto markets volatile.
According to coinmarketcap.com, the global market capitalization of crypto assets has fallen over 57% to $935 billion so far this year.
Popular crypto asset Bitcoin, for example, has fallen almost 60% so far in 2022. Other assets like Ethereum, BNB, Solana, Dogecoin and Polkadot have fallen in the range of 46% to 81% , during the same period.
Analysts say investors’ falling risk appetite has forced them to turn to less risky assets like bonds.
Going forward, they expect volatility in crypto markets to continue in the short term.
Minal Thukral, Executive Vice President, Growth and Strategy, CoinDCX, says stock selling pressure is casting a shadow. Crypto markets continue to be sideways. Ethereum, Bitcoin are deflationary assets.
On the other hand, independent market expert Devangshu Datta says that the lack of a fundamental benchmark makes crypto assets a riskier bet to hold in the long run.
Devangshu Datta, an independent market expert, says Bitcoin’s decline of up to 99% is possible. No fundamental benchmark for crypto. Crypto assets are not a long-term safe bet.
Meanwhile, technical charts suggest a “death cross” pattern for bitcoin, which signals an upcoming bear market.
Turning to today, investors will be closely watching the Reserve Bank of India’s interest rate stance following the 3-day monetary policy committee meeting.
According to experts, the central bank is likely to raise interest rates by up to 50 basis points. FII flows, the movement of the rupee and crude oil prices will also be on investors’ radar.