(Kitco News) Despite volatility that continues to shake the crypto market, bitcoin has hit between $ 28,000 and $ 32,000 over the past week. But the latest economic warning from JPMorgan CEO Chase Jamie Dimon is contributing to risk sentiment.
After attempting to break the $ 32,000 level in the last 24 hours, bitcoin is down 7% on the day and is trading below its key psychological threshold of $ 30,000.
For most of May, bitcoin has been closely following sentiment on the US stock market, and the relationship is still untouched as bitcoin retreated along with US equities amid sharp warnings from JPMorgan CEO Chase Jamie Dimon on Wednesday.
“You know, I said there were storm clouds, but I’ll change that … it’s a hurricane,” CNBC quoted Dimona at a financial conference in New York. “You’d better get ready … JPMorgan is defying and we’ll be very conservative at our discretion.”
And while the economic situation seems “okay” at the moment, it’s still unclear whether it’s a “minor” hurricane or a “Superstorm Sandy.”
“It’s sunny right now, things are fine, everyone thinks the Fed can do it,” Dimon said. “That hurricane is right there, down the road, coming to us.”
The two most significant risks on Dimon’s radar are the Fed’s quantitative tightening (QT), which begins on June 1, and the impact of the war in Ukraine on commodities.
“We’ve never had a QT like that, so you’re looking at something you could write history books for 50 years,” Dimon said. “Wars are going badly, [they] to go south with unintended consequences, “Dimon said.” We are not taking appropriate steps to protect Europe from what happens to oil in the short term. “
Dimon doesn’t shed oil for $ 150 or $ 175 a barrel.
JPMorgan CEO Chase’s report turned Wall Street sentiment back to bearish, said senior OANDA market analyst Edward Moya.
“The mood on Wall Street is turning very negative because the economy is heading for a rough patch. JPMorgan CEO Dimona’s comments that the economy is heading for a ‘hurricane’ are also weighing on sentiment,” Moya said on Wednesday. “US stocks have gone negative as expectations have risen that the Fed will not slow down in its rate-raising campaign following solid data on the US economy and Bank of Canada’s aggressive rate-cutting negotiations. Everyone expects economic activity to moderate over the next pair.” months, mainly because inflation risks remain elevated and now that the Fed has begun to reduce its balance sheet by $ 8.9 trillion. “
According to Moya, traders can look at institutional investors to see if the price of bitcoin is bottom.
“Bitcoin continues to monitor what’s happening on Wall Street, but that may change if more institutional investors believe the crypto bottom has been reached,” said Edward Moya, senior market analyst at OANDA.
Bitcoin is based on a period of consolidation. However, the risk of rapid retracement cannot be ruled out, said Fairlead Strategies founder and managing partner Katie Stockton.
“Short-term dynamics are positive … supporting the 50-day MA ($ 34.8,000) test,” Stockton said in a note this week. “We maintain a medium-term bearish bias, but we note that medium-term momentum is negative and the price remains below the daily cloud.”
Stockton added that long-term support is around $ 27,200 and long-term resistance is around $ 42,600.
Overall, interest in cryptoinvestments appears to be returning over the past week, with data from CoinShares showing that crypto funds have flowed $ 87 million last week from $ 141 million the previous week, GlobalBlock analyst Marcus Sotiriou said.
“The inflow was dominated by bitcoin because it remains the most popular cryptoinvestment for institutions in this current macro-environment, while Ethereum recorded an outflow of $ 11.6 million. , which are further on the risk curve, “added Sotiriou.
However, one counterweight to the future could be bitcoin miners selling their holdings to achieve profit margins at a falling price.
“Miners can start selling hodl’d bitcoin on the open market,” Compass Mining said in a note on Wednesday, referring to data from CoinMetrics. “At least they’re in pain after the last big drop in price. Combine that with the downward adjustment of the difficulty – which shows the miners will shut down – and it seems that the miners may hit the wall in profitability.”
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