Cryptos continue to fall, putting the spotlight on US GDP and big tech figures
Cryptocurrencies continue to fall. Bitcoin (BTC) retreats over 0.6% in the last 24 hours and is below $27,300, while Ethereum (ETH) drops 0.8% and falls to $1,820. In the past week, the market's two biggest cryptos have retreated 9% and 13%, respectively.
"The momentum that was there a few weeks ago is no longer there, and traders are confused about why the price has stalled at the 30K price level, which isn’t even a meaningful resistance," explained Naeem Asla, chief investment officer at Zaye Capital Markets, in regard to the reigning cryptocurrency.
According to the expert, most believe that the current sell-off in the price is due to the Federal Reserve (Fed) adopting a more hawkish monetary policy stance, which has taken the wind out of the crypto king. It is worth noting that CME's FedWatch tool estimates that the probability of the central bank raising rates by 25 basis points next May 3 hovers around 90%, five times higher than a week ago.
"The main price point that everyone will be paying close attention to will be the 25K support level, and any lower than that will bring more disappointment," Aslam added.
James Harte, market analyst at TickMill Group, defends the same idea as expectations of rate hikes have led to a rally in the U.S. dollar and bond yields. As a result, he noted, traders seem to be leaning toward these lower-risk assets and have taken profits following the rally in cryptocurrencies, which "are likely to stay under pressure ahead of the May FOMC."
"Looking ahead this week, US data and US earnings will be the key inputs to watch for crypto traders. Any weakness in US GDP might help pull tightening expectations back a bit supporting crypto, similarly for US earnings. However, should GDP prove resilient this should keep crypto assets under pressure near-term," he explained.
Accordingly, big tech´s numbers will be of much interest to the cryptocurrency market, as the correlation with the choosy Nasdaq remains very high. This week, Amazon, Microsoft, Alphabet (Google) and Meta will admit their results to the markets, while next week it will be Apple's turn. So far this year, big tech has rebounded strongly after a very negative 2022.
In addition to profit and sales figures, attention will be focused on "the possibility of further staff reductions in an effort to bolster margins, while any profit outlook projections from these corporates will be under particular scrutiny," as Richard Hunter, director of markets at Interactive Investor, highlighted.
In the rest of the market, there have been falls among the main altcoins. Polygon (MATIC) drops almost 3%, while Ripple (XRP) Cardano (ADA), Solana (SOL) and Polkadot (DOT) retreat over 1%.