Crypto is on track to produce jaw-dropping returns for Q3 | Crypto

Crypto is on track to produce jaw-dropping returns for Q3

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– Cryptocurrencies in aggregate are holding out better than the S&P 500 index (^GSPC) and bonds and remain on par with the Nasdaq from July 1 to the final week of the third quarter.

– Oanda senior market analyst, Edward Moya, said in a Monday note that “chaos in fiat currencies is starting to make crypto look more attractive.”

– Moya added that “Bitcoins modest weakness is rather impressive given the panic selling occurring across a wide range of risky assets.”

– Currently trading around $19,000 per coin, the largest cryptocurrency is little changed (-1%) at the start of the third quarter’s final week.

– The quarterly performance follows worse crypto losses compared with other asset classes for the first half of the year, stemming not only from inflation fears and central bank decision-making, but also a high degree of leverage and poor risk compliance from a number of major crypto firms.

– Hours after the Federal Reserve said it would hike interest rates by another 75 basis points last Wednesday, bitcoin (BTC-USD) briefly fell as much as 6.8% to $18,290 its lowest level since June.

– For the same period, the Nasdaq Composite (^IXIC), which has shown only half the loss in value as bitcoin so far this year, has sold off by half a percent and trades below 1.8% its July 1 value.

– The monthly inflation data report and monetary policy events such as the Fed action last week have heightened the correlation between crypto and equities.

– Because crypto is largely higher risk than stocks, it often reaches near-term bottoms and peaks first, Farrell added.

– Farrell also said that it is not unreasonable to speculate that if we had experienced the price action we saw the past two weeks back in Q1 or Q2, there would be cascading liquidations throughout the crypto market, exacerbating any drawdowns.

– Looking ahead, crypto market watchers should be mindful of Friday, when end-of-month and quarter options expire, according to crypto prime broker Genesis.

– According to crypto options aggregator, Coinglass, open interest for bitcoin options contracts has increased from $4.2 billion to $5.4 billion since the third quarters start, yet still sit at roughly half the levels seen in the first and second quarters.

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