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CATEGORY: crypto rebound


Jan 25, 2022 07:10

Bitcoin Price Crash and Rebound – Should you Buy Cryptos Today?

The Bitcoin roller coaster, it's back on the road. Yesterday Monday saw the entire stock and crypto market hurtle downhill at a speed rarely seen. Bitcoin was 20% lower on a weekly basis. The DAX also fell by 3% and the Dow by 4%. Almost none of the values ??remained green. Then around noon the turnaround. Stocks and cryptocurrencies shot up, markets closed slightly higher. How does the roller coaster continue? And most importantly, should you Buy Cryptos today?

Geopolitics Affecting Cryptos - Ukraine, Inflation and Interest rates

The political risks surrounding the Ukraine-Russia conflict weigh heavily on the markets. A war right on Europe's doorstep could cause markets to plummet further. In addition to the political risks, there are concerns about a turnaround in interest rates and drastic intervention by the FED to combat inflation. This is around 7% in the USA. Another risk that primarily affects tech stocks.

Why does Bitcoin correlate with Tech?

Tech stocks generally stutter on interest rates and inflation worries. So far so known. But why don't values ??like Bitcoin or other cryptocurrencies benefit? Shouldn't they be performing right now?
In fact, there is a logical reason why tech values ??and Bitcoin are correlated. The cash flows. Crypto and tech stock investors are mostly the same. This means that those who own tech shares usually also own cryptocurrencies and vice versa. Value, cyclical, and bond investors usually move in other "bubbles". But what does that mean?

Total Crypto Market Cap in USD - TradingView

The Money Flow Problem

When interest rates rise, investors usually turn to less risky investments. There is a shift from tech and crypto to value. In addition, many tech and crypto investors are invested with leverage, mostly through loans. If these loans become more expensive due to rising interest rates, the investors cancel the loans and sell the investments. The result: Bitcoin and tech fall disproportionately.

Conclusion: Should I get in now and Buy Cryptos?

That is up to you and should be decided according to your own willingness to take risks. At least the next three interest rate increases are already priced into tech and crypto values! The existing uncertainties from the FED could be resolved on Wednesday when the central bank publishes its rate hikes. The Ukraine risk, on the other hand, remains unpredictable. From a purely economic and political point of view, war is unlikely. However, the West's indecisive and in many respects embarrassing behavior is creating uncertainty in the market. The next few weeks could remain restless, but those who invest in the long term could use the entry in the next few days and weeks.

If you decide to buy Cryptos, consider solid exchanges like Binance ,  Coinbase ,  Kraken  and  Bitfinex  .

Bitcoin Wallstreet© Cryptoticker

The post Bitcoin Price Crash and Rebound – Should you Buy Cryptos Today? appeared first on CryptoTicker.

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