Cryptocurrency markets continue to trade sideways this week as Bitcoin and Ethereum remain at $20k and $1.3k. The global cryptocurrency market cap is at $960 billion, with little change in the past 24 hours. The market is holding support relatively well this week and is likely building momentum for a potential bull run next week.
Key Points:
One reason for Bitcoin’s relatively-positive price action this week is rumors that the Federal Reserve might be dialing back its inflation battle as the economy is cooling. After raising interest rates month after month, it seems the economy is showing signs of recovery that could incentivize the Fed to take a break from raising interest rates this month.
We saw stocks like the S&P 500 perform quite well this week, increasing by over 83 points (2.26%) in the past five days. In addition, the NASDAQ saw gains of 184 points, up 1.69% in the past week.
With the stocks showing bullish momentum, it’s unsurprising that Bitcoin is trading above the $20k range.
There is increasing talk of Bitcoin providing a safe haven for investors and a hedge against inflation. It seems Bitcoin is starting to track closer to gold, raising the idea that BTC is becoming a safe haven for investors looking to hedge against global and U.S. economies.
In other positive news, Bitcoin’s fear and greed index for today is at 25, five points higher than yesterday. While the market is still showing extreme fear, it’s not as low as it was last week, when it hovered at 20 points.
Ethereum is in the crosshairs of federal regulators as the SEC is preparing to pass judgment on whether ETH qualifies as a security. In a recent filing against crypto influencer Ian Balina, the SEC claimed that because most of Ethereum’s validators are in the United States, ETH falls under their jurisdiction and qualifies as a security.
The SEC added a special office for crypto assets, which will start enforcement actions for promoters and companies who could be found liable for promoting or selling securities if the crypto assets qualify.
In fact, this week’s big news was the SEC’s fine for Kim Kardashian, who had to pay over $1.2 million for a promotional Instagram post that failed to disclose how much the company, EthereumMax, paid her.
It’s common for regulators to take drastic actions during bear markets since that’s when the number of disgruntled investors is at its highest. However, the reality is that crypto markets are cyclical and those that invest in cryptocurrency need to accept at least some responsibility for the risk they take. After all, crypto markets aren’t yet regulated like traditional stocks, so the volatility and price fluctuations will be much higher than in conventional markets.
If you aren’t ready to risk drastic devaluations of your portfolio, it’s best to avoid investing in cryptocurrencies. Instead, try traditional stock markets, which provide investors with much more protection and recourse if things go south.
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