Today’s stock movements and Cryptocurrency Markets are providing a nice bout of bullish sentiment for battered investors for most of 2022. As of 3 PM ET on Tuesday, Ethereum (ETH 8.07%)And the Bitcoin (BTC 3.38%)And the Cardano (ADA 11.89%) It had risen 11.7%, 4.9% and 13.3%, respectively, in the past 24 hours. The moves come amid expectations that the Federal Reserve may ease the pace of interest rate hikes sooner than expected, as well as some stronger-than-expected earnings reports from large companies this week.
One of the main drivers of expectations that the Fed may slow its rate increases came from new data released today with the updated August figures in the S&P CoreLogic Case-Shiller Home Price Index. While home prices accelerated 13% in August year-on-year, that increase is down significantly from the 15.6% rate seen in July. Accordingly, this was the sharpest slowdown we’ve seen in the Case-Shiller Index since its inception.
Data from the Case-Shiller 20-City Index provided a clearer picture of the trend in prices in metropolitan areas. This measure showed a decline of 1.6% in the 20 largest US markets month over month.
Other positive earnings data from global companies such as coca cola And the GM This week has boosted hopes that the economy may make a possible soft landing, allowing interest rates to fall in the medium term.
Today’s amazing moves higher in major cryptocurrencies indicate the kind of high correlation and higher beta moves that the crypto sector is making this year. Overall, most of the same macro factors that drove stocks lower this year have had a similarly large impact on digital assets. Accordingly, and as a high-risk proxy for stocks, cryptocurrencies often see larger gains during bull days in the stock market.
If interest rates start to fall later this year, some analysts believe we could see an accelerated hike through to 2023. However, it remains unclear whether the Kosumer Price Index and the PPI will support the lagging data we’re seeing from the housing market. .
Long-term investors looking to hit a bottom haven’t managed to do so so far this year. Most of the retracements were met with lower bottoms, suggesting that real capitulation in riskier assets is not seen today. In some ways, today’s massive rally in major cryptocurrencies may be a sign that speculative capital has not yet been fully laundered. Thus, today’s rise may be a bearish signal in the near term for the market.
But it is entirely possible that the market is right in its estimation that rates cannot go up much more than that. The economy has undoubtedly slowed in some key areas, such as housing. And given the data lag that was an issue with the Fed’s delay in responding to the initial spike in inflation, it’s possible that prices have fallen more than the data suggests.
My opinion is that it may be too early to say that the selling pressure is over for cryptocurrencies in general. However, these three high-quality coins could be among the top performers when the market turns bullish again. Thus, now might be an interesting time to look at easing in positions as the market is looking for a bottom.
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