20.09.2022 – Risk aversion in the financial market – the Federal Reserve is casting its shadow. High-tech stocks in particular have suffered recently. And cryptos with them, because Bitcoin is tech. Now BTC is testing an important chart mark.
Many investors are currently selling their savings and selling what they have. Bitcoin, for example. A quick, rough chart analysis looking at the daily chart does not bode well. For example, BTC has broken the support it has retracted since June, see the red line below. Although the price recovered, the line is perforated for now. Usually, this is a harbinger of a complete breakout to the downside.
Source: Bernstein Bank GmbH
The reason for the poor performance is mainly monetary policy and the macroeconomic situation. On Wall Street and the world stock markets, it is considered a foregone conclusion that the Fed will take an interest rate step of 75 basis points tomorrow, Wednesday. Some even expect 100 basis points. And an increase in key interest rates in a few months to 4.5 percent. Likewise, after the FedEx warning, the belief that a global recession is imminent has spread.
High yields on bonds
That’s why large addresses prefer to flee into safe U.S. government bonds, which promise attractive interest rates right now. The ten-year U.S. bond, for example, yields 3.489 percent if held to maturity – the highest yield in a decade. And two-year U.S. bonds are yielding 3.946 percent, the highest in 15 years. It’s not just in the United States that safety-minded investors are likely to flee into bonds. This week, central banks in Sweden, Switzerland, Norway and England could also raise interest rates. According to Bloomberg, we could see a combined rate hike of 500 basis points – that’s a lot of capital being sucked out of the market.
Fear of recession
So where do we go from here? We don’t see a trend toward risk appetite at the moment. The skepticism is palpable. “The aggressive tightening of policy in the coming 4-6 months, not just in the US but globally, increases the risk of a recession next year,” said Maria Landeborn, Senior Strategist at Danske Bank. And further: “We expect uncertainty will remain high surrounding inflation, rates and the overall economy, which is negative for market sentiment and risk assets.”
Fighting cyber crime
But perhaps that is precisely the opportunity. Once everyone is depressed and devastated, the tide will turn. But when will that be? Moreover, there is another factor in cryptos that you need to keep an eye on in the trade press: The Western developed world’s fight against cyber crime. “Follow the money” is the motto here – investigators are tracking down anonymous wallets in a big way right now, and many IT criminals are nervous and selling. See the self-shutdown and split-up of the Russian gang “Conti” after publication of internals in the wake of the Ukraine war and after the FBI declared a $10 million bounty. We keep an eye on the situation for you. And wish you successful trades and investments!
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