Bitcoin & Crypto Fall as Market Awaits US Inflation Numbers, ‘Overvalued’ Tech Stocks Worry Traders
Categories: US
The crypto market traded lower over the weekend, with US inflation data, possible moves by the US Federal Reserve (Fed), and bearish-looking technology stocks all weighing on investors’ sentiment and causing worry about the way forward.On Monday at noon UTC, bitcoin (BTC) was down by 3.7% for the past 24 hours and by more than 11% for the past week, trading at USD 41,099. At the same time, ethereum (ETH) was down 6% for the past day and more than 13% for the week to a price of USD 3,057. Bitcoin 2022 fails to excite traders Perhaps surprisingly, the major industry conference Bitcoin 2022, held in Miami from Thursday to Saturday last week, did not translate into excitement among bitcoin traders.Leading up to the event, BTC fell hard on Wednesday, before trimming some of its losses as the conference kicked off on Thursday. As of Friday, however, the bears came back in force to push the coin down again, with selling continuing on Sunday and Monday morning in Europe. As usual, the selling over the weekend led to spikes in liquidations of leveraged bitcoin derivatives traders on exchanges. According to data from Coinglass, more than USD 40m of bitcoin long positions were liquidated during 12-hour periods on both Friday and Monday. Focus turning to US inflation Notably, the moves in bitcoin and the broader crypto space also come as the market awaits new inflation numbers in the US on Tuesday this week.As the month before, the figure is expected to be high, with the consensus among analysts being a reading for the consumer price index (CPI) of 8.4%.According to the trading team at the Bitfinex crypto exchange, there is "a sense of nervousness" that has" crept into the market amid low volumes over the weekend."According to the trading team at the Bitfinex crypto exchange, there is "a sense of nervousness" that has" crept into the market amid low volumes over the weekend." BTC and tech stocks correlation grows For bitcoin’s part, the moves over the past week have largely followed those of the stock market, and more specifically the technology-heavy Nasdaq 100 index.However, this is not a new thing. There has been a consistent positive correlation between BTC and tech stocks since 2019, with the correlation only growing stronger last week as both markets fell in tandem. According to Steven Cress, the Head of Quantitative Strategy at Seeking Alpha, many tech stocks are “significantly overvalued and vulnerable to government attack.” Apple, the most valuable of all tech companies listed in the US, is “extremely overvalued,” the strategist said, giving it a valuation grade of ‘F’. The Nasdaq 100 index closed at USD 14,327 on Friday. Hayes’ prediction thus represents a significant fall for the index, taking it back to a level not seen since July 2020.However, he stressed "There isn’t much science to these numbers other than a gut feeling" and "Nothing is certain — I only ascribe probabilities to outcomes and trade accordingly."