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Cryptocurrencies outperformed US equities for a change, with Bitcoin and Ether gaining for the first time in five days.
Bitcoin, the largest virtual currency by market value, rose about 2 percent to US$19 2912 as of 4:26 p.m. in New York. Earlier, it slid as much as 4 percent toward a three-month low. Ether rose about 1,5 percent. It had dropped as much as 20 percent since a much-touted network upgrade last week.
Markets are shuddering at the Federal Reserve’s determination to fight inflation by constricting financial conditions. Treasury yields hit multiyear highs and stocks fell as a parade of central banks joined the Federal Reserve in boosting rates to curb scorching levels of inflation at the expense of economic growth.
The Fed “was heavily frontrun in crypto, and we’re hence seeing a correction before stocks have even fully moved,” said Wilfred Daye, chief executive officer of Securitize Capital, a digital asset management firm. “This has been a pattern we’ve seen repeatedly with event-driven moves recently due to the relative immaturity of crypto markets and their participants. Volatility is higher in crypto than equity trading.”
The backdrop has offered little respite for crypto markets. The sector was already reeling from a US$2 trillion plunge from a 2021 record high, an unraveling pockmarked with blowups such as the Three Arrows Capital hedge fund and the Terraform Labs project — whose co-founder Do Kwon is wanted by authorities.
“Last night BTC/USD revisited multi-year lows around $18 200,” said Joshua Lim, former head of derivatives at Genesis Trading. “There were some shorts that got trapped at the lows getting liquidated now.”
The MVIS CryptoCompare Digital Assets 100 Index is down this week, taking its losses for 2022 to about 60% compared with 23 percent for global stocks. The correlation between equities and Bitcoin is elevated and close to a record, a sign of how assets are being tossed around by common macro factors.– Bloomberg
Online Reporter