Crypto market needs 2-3 months to stabilize before ‘a more sustainable recovery’, analyst says, as bitcoin falls below $40,000 – MarketWatch
Bitcoin extended its losses on Friday, falling below $40,000 with investors concerned about the worsening war between Russia and Ukraine, after Russian troops seized Ukraine’s largest nuclear power plant.
The cryptocurrency BTCUSD,
Russian troops occupied Ukraine’s largest nuclear power plant on Friday, after a fire ignited by its attack was extinguished. The U.N. and Ukrainian officials said no radiation was released, Associated Press reported.
Bitcoin prices have shown a relatively high correlation with growth stocks for the past few months. U.S. stock indexes were down sharply Friday afternoon. The Dow Jones Industrial Average DJIA,
Investors were also watching if the U.S. and its allies would levy any new sanction measures against Russia. “We should pay close attention to whether the Russian Ruble can stop the fall against other major currencies amid intensifying financial sanctions on Russia, since another drop can potentially push the price of bitcoin higher like it did on Monday,” Yuya Hasegawa, analyst at crypto exchange bitbank wrote in Friday notes.
David Duong, head of institutional research at Coinbase COIN,
“Prior to the invasion, we thought a recovery could come sooner, but we think investors now need to have more clarity over the timing of peak inflation and the Fed hiking cycle before they may be willing to deploy more capital here,” Duong wrote.
“Sanctions on the Russian central bank have drained the global system of ~US$300 billion in reserve liquidity, which has the potential to hurt risk assets in the weeks ahead,” according to Duong.
Federal Reserve Chairman Jerome Powell on Wednesday said the central bank intends to raise its policy interest rate by a quarter-percentage point following the end of its March 15-16 meeting.
