Key Takeaways:
- The stock market showed signs of recovery on Friday after prolonged selloff.
- The crypto market has failed to register similar gains, despite its alleged correlation to stocks.
- Experts on Wall Street and crypto insiders advice the crisis is far from over.
YEREVAN (CoinChapter.com) -The recent market selloff that saw millions in value erased from investors seems to be over. On Friday, stock prices closed at a weekly high, ending a seven-week losing streak. The crypto market, meanwhile, failed to show similar signs of recovery. However, Wall Street is hesitant to declare the crisis over.
As the last week came to a close, S&P 500 rose 100 points (2.5%) on Friday to close at 4,158, bringing its gains for the week to 6.6%. Since the year began, the S&P 500’s had dropped 13%.
With investors interested in technology stocks, tech-heavy Nasdaq also registered a composite gain of 3.3% following its nearly 30% drop, the worst dive ever. The Dow Jones Industrial Average, which had shed over 10% since January 2022, also spiked 1.8%.
Inflation and speculations of the Federal Reserve’s plans to tighten monetary policy had pulled the break on the impressive two-year bull run in the stock market following the Covid-19 lockdown.
However, amid the selloff in stock prices, the energy sector stood out as the largest gainer. Fueled by the war in Ukraine, the sector has rallied nearly 60% in 2022.
Despite the recent signs of recovery, investors and brokers on Wall Street are unsure if the market selloff is over.
Recommended: Twitter shareholders sue Elon Musk for manipulating stock price
What about a selloff in the crypto market?
The extended selloff in the crypto market saw Bitcoin (BTC) fall below $26,000 in May. As of Monday, May 30, BTC remains over 55% below its all-time high of $69,000.
However, despite closing under $30,000 for seven consecutive days, the largest crypto by market cap shows slight recovery signs. At the time of writing, BTC is up almost 5% and is exchanging hands at $30,566 per token.
The total cryptocurrency market cap, which shrunk by over 31% in May, is also on the path to recovery.
However, just like the experts on Wall Street, crypto insiders are hesitant to celebrate early.
According to the Indian cryptocurrency exchange WazirX, overall sentiments for the crypto market remain in the “extreme fear” zone. Additionally, experts believe it is too early to speculate on an immediate price recovery for Bitcoin (BTC) and other cryptos.
“Bitcoin climbed up by nearly 3 percent since yesterday to edge above the $30K level…The market sentiment for Bitcoin and crypto, however, continues to remain in the “extreme fear” zone,”
the WazirX trade desk claimed.
Meltem Demirors, Chief Strategy Officer at CoinShares, considers the situation extremely bearish. Bitcoin “below $30 is goblin town, below $20k is mordor,” she claimed.
Bitcoin prices and stock markets are largely related. However, recent developments reveal cryptos may be down despite stocks rallying.
As Darshan Bathija, CEO and Co-Founder of Vauld, pointed out, Bitcoin (BTC) failed to end the previous week with any significant gains. On the other hand, the stock market ended its negative steak.
“Though the U.S. and global stocks rebounded and closed the week by registering their first weekly gain since late March, the same wasn’t seen in the crypto markets,”
Bathija, told FE Online.
For Bitcoin to make any significant progress, it needs to close above $30,000 for a few days. After that, it can make a recovery towards the $40,000 mark.
