Bitcoin slips below $47K despite rally across risk-on assets

Bitcoin S&P 500 BTC
image from medium.com

Key Takeaways:

  • Risk assets rally, like S&P 500, the stock market index tracking the performance of 500 large companies listed on stock exchanges in the United States.
  • Bitcoin lags behind, with conflicting prognosis for the year ahead.

YEREVAN (CoinChapter.com) – While Bitcoin consolidated around the $46,100 support for over a month, other high-risk assets rallied. For example, the stock market rose against the great concerns of growing inflation. S&P 500 has shown a consistent 4.5% uptrend since Dec 20.

S&P 500 performance in the previous year. Source: SPX on TradingView.com
S&P 500 performance in the previous year. Source: SPX on TradingView.com

However, tackling the rising inflation could spark a sell-off in risk assets, reverse the stock market’s bullish trend, and cause further damage to Bitcoin. Moreover, as CoinChapter earlier reported, the Fed’s hawkish policy will come into play earlier than expected. The bond-purchase cut will kick off in January 2022, while the Fed officials predict economic growth of 4% in 2022.

Additionally, the declining trading volume on the SPX chart above shows a divergence from the rising price action. The deviation could also suggest a decline ahead.

Also read: Bitcoin in 2022: perseverance amidst regulatory purview

While the S&P 500 charted above its 20-day exponential moving average (EMA-20) all year, Bitcoin saw substantial volatility. The alpha crypto fell 32% short of its $69,000 all-time high of Nov 8.

Where are Bitcoin’s 100K hopes?

The flagship cryptocurrency’s fluctuations sparked opposing opinions from experts. Antoni Trenchev, the co-founder and managing partner of digital finance giant Nexo, estimated the much-anticipated milestone of $100,000 to arrive mid-2022. On the other hand, Carol Alexander, professor of finance at Sussex University, delivered a grim prognosis with a BTC/USD rate dropping to $10,000 in 2022.

Known crypto skeptic Peter Schiff also didn’t miss out on the chance to rain on Bitcoin’s 13th birthday parade by another gloomy tweet. The stockbroker asserted that the leading cryptocurrency is doomed to fail, even as risk-on assets like the stock market rally.

Unsurprisingly, Schiff proposed gold as a better option for asset allocation in the upcoming year.

Gold fell along with bonds as investors bought risk-assets. But soon gold will diverge from bonds, as when it comes to inflation, bonds are the riskiest asset, and gold is the safest!

said the executive.

Moreover, the analytical platform Ecoinometrics reported a significant cool-off in whale accumulation, supporting the bearish outlook. In detail, ‘whales’ are wallets with a large number of BTC coins, while ‘little fish’ or ‘shrimp’ represents retail investors with less than 1BTC.

Also read: Federal Reserve plans three rate hikes next year – how does it impact equities and crypto.

Bitcoin weekly chart. Source: BTCUSD on TradingView.com
Bitcoin (BTC) weekly chart. Source: BTCUSD on TradingView.com

As of publication, the flagship cryptocurrency changed hands at $46,735, after a 32% fall from its all-time high in early November.

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Bitcoin, Bitcoin slips below $47K despite rally across risk-on assets

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