‘Global Financial Meltdown’ May Be About to ‘Smoke’ Bitcoin, Ethereum, BNB, XRP, Cardano, Dogecoin, Polygon and Solana
01/23 update below. This post was originally published on January 22
BitcoinBTC, ethereum and other major cryptocurrencies have stormed into 2023 with a $200 billion earthquake.
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Bitcoin price has risen 30% since the turn of the year, climbing above $23,000 per bitcoin after falling below $16,000 in late 2022. Ethereum price has seen a similar rise while some of the top ten cryptocurrencies – BNB, XRPXRP , cardano, dogecoin, polygon and solana – have made big gains.
01/23 Update: Bitcoin and other major cryptocurrencies continued to climb over the weekend, pushing the combined crypto market to levels not seen since the shock collapse of major crypto exchange FTX in November.
The Bitcoin price rally has opened up a so-called futures gap that some believe could be a “magnet” for the price. Such gaps are the difference between a market session’s close and the subsequent open. When a gap is said to have been “filled” it means that the price has returned to the level before the gap.
“Bitcoin continued its rally over the weekend, rising to a peak around $23,400. This has left a CME gap on the Bitcoin CME Futures chart around $22,400, which many analysts theorize is a magnet for price,” Marcus Sotiriou , market analyst at digital asset broker GlobalBlock, said in emailed comments. “There are also CME gaps around $17,000 and $20,000, which were formed on this recent aggressive move” – which could indicate that the bitcoin price will fall back to these levels in the near term.
Meanwhile, technical analysis suggests “bitcoin has started a new bull market and is heading towards $24,000, where the psychologically important 200-week moving average and the 161.8% Fibonacci level of the momentum from the December lows are concentrated,” according to Alex Kuptsikevich , senior market analyst at FxPro, said in an emailed statement. “The 50-week moving average is heading to the same area. The market may need a long recharge and consolidation before another upside wave begins.”
Now former CEO of bitcoin and crypto exchange BitMex Arthur Hayes has warned that a “catastrophic global financial meltdown” could be about to crash the bitcoin price and the crypto market.
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“Bitcoin is simply experiencing a natural rebound from the local lows below $16,000,” Hayes wrote in a blog post, adding that he believes “bitcoin is on the rise because the market is ahead of a resumption of Fed money printing Reserve.
“Market expectations for a pause in rate hikes and even a Fed pivot have been building, despite repeated Fed official comments to the contrary,” crypto market analyst Noelle Acheson wrote in an email.
Fed Chairman Jerome Powell, who last year pushed interest rates to a 15-year high as part of a concerted effort to bring down inflation, has said interest rates must be raised in 2023, echoed by other Fed officials who have supported raising the benchmark . federal funds rate above 5%.
“If the Fed does not follow through with a pivot, or more Fed governors talk down any expectation of a pivot even after ‘good’ consumer price indices (CPI), bitcoin will likely crash back to previous lows,” Hayes wrote. predicting this scenario will cause “risky asset prices to crater. Bonds, stocks and every crypto under the sun will be smoked as the glue that holds together the global USD-based financial system dissolves.”
If the “catastrophic global financial meltdown” scenario occurs, Hayes expects he will “get another bite at the apple” and “will know that the market has probably bottomed out, because the crash that happens when the system temporarily breaks will either hold previous lows of $15,800 or it won’t.”
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The Bitcoin price fell below $16,000 after the shock FTX collapse last year that put pressure on the combined crypto market, which had already lost around $2 trillion.
Despite warning of a looming market meltdown, Hayes expects the Fed will eventually step in to stop the markets.
“It doesn’t really matter what level is ultimately reached on the drawdown, because I know the Fed will later go to print money and stave off another financial collapse, which in turn will mark the local bottom of all risky assets,” Hayes added .
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