Cryptocurrencies Take a Step Back

Cryptocurrencies are taking a step back. Bitcoin continued its downward spiral this morning, reaching a new low for the week. The rest of cryptocurrency followed suit as well with many down over 1% on Monday afternoon.

Bitcoin has fallen for seven consecutive weeks, but it spent much of the day near or above $30k. “As far as last 24 hours go,” 3iQ Digital Asset’s Head Mark Connors told CoinDesk; There was a consolidation from six to eight weeks worth of sell-off during which time we’ve seen some stability return for Bitcoin (BTC).

Cryptocurrencies, including Bitcoin, have been denting the performance of equity markets recently. The Nasdaq dropped 1% on Monday after an upward trending market last fall saw investors becoming more risk-averse due to inflation and supply chain issues that continued to surge throughout this year while they were also cautious about what might happen with interest rates or other economic factors going forward which could cause another recession in America like we had back when Windows 95 was released.

In the last week, cryptocurrencies were hit with two major events that caused investor caution to flair. The first was when terraUSD stablecoin (UST) crashed and then on Monday both AXS & AVAX declined by about 12%. However, SOL went down more than 6% in this time frame too. Ethereum, the second-largest crypto by market cap, fell over 4.6%, although it held fast above $2,000.

“What we’re seeing in equities is almost a year’s worth of returns being taken off the table by this Fed hike,” Connors said. “You’ve seen digital assets, bitcoin, and other altcoins fall as investors assess whether their interest rates will stay low or go up more than expected.”

The price of stablecoins rose in recent weeks as traders continue to seek refuge from the ongoing crypto winter. However, few analysts predict that this trend will last longer than past bear markets, and even Terraform Labs’ CEO Do Kwon proposed a “revival plan” for his company which would see them fork out UST without integrating with other blockchains or returning any funds associated within our current system.

Connors sees three to nine months of choppy markets with Bitcoin prices potentially dropping below $20,000. In this environment he advises investors focus on Bitcoin and Ethereum because they are more stable than other coins in circulation at the present time, since market sentiment has been poor due largely from economic uncertainty.

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