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Bitcoin, an asset that is very prone to manipulation. Cryptocurrencies are now under the gun during the difficult situation with the quantitative easing programme because they are a risky asset.
Bitcoin
Why it is not a good idea to consider current positions for buying. First of all the problems in China with Evergrande. Even though it is a local Chinese company, but still if things go very badly there, it will affect the whole financial system. Not as dramatically as with Lehman Brothers, but the volatility will definitely increase. Money will very quickly run away from risky assets to a calmer place.
The second reason is the Fed will sooner or later begin to roll back its stimulus programme and this will once again affect risky crypto assets.
Another hint that cryptocurrencies are in trouble was the US Federal Reserve’s announcement that Stablecoins pose a serious threat to the financial security of countries around the world. Unregulated analogues of official money can undermine countries’ economies at any moment, and regulation of such currencies by states is very close.
The technical picture for bitcoin does not show anything good either. On the higher timeframes, a bearish movement is already visible. Risk appetite will fall more and more as the situation in the global economy is getting worse.
What can be said optimistically. The cryptocurrency infrastructure is developing. Countries are officially accepting bitcoin. Many countries are considering digitalising their currencies, so bitcoin is not going anywhere. Right now, this cryptocurrency should be seen as a highly volatile investment and nothing more. But while the turmoil of support contraction hangs over all global financial markets, it is worth refraining from buying such assets.
09.30 Markit Composite Business Activity Index for September
13.00 Bank of England meeting minutes
14.30 US initial jobless claims
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