Bitcoin
rallied from $20.5K to $21.6K during the day on Tuesday but later reversed to
decline and went back on Wednesday morning. Ether corrected deeply, losing 4.4%
over the last 24 hours. The top ten altcoins showed mixed dynamics, ranging
from a 6.5% decline (Solana) to a 3.6% gain (Dogecoin).

 

Total crypto
market capitalisation, according to CoinMarketCap, declined 1.9% to $900bn.
Bitcoin’s dominance index dropped 0.2 points to 43.5%. The Cryptocurrency Fear
and Greed Index is up 2 points to 11 by Wednesday and remains in a state of
“extreme fear”.

 

After a
strong move down last week and a retreat from the extremes on Sunday, BTCUSD
failed to gain ground with buyers and remained pegged at the round level of
$20K.

 

Bitcoin’s
recent drop below $20K triggered a new wave of deleveraging and liquidations
that affected miners and long-term investors, Glassnode claims.

 

Ethereum
co-founder Vitalik Buterin criticised the popular Stock-to-Flow model for
predicting bitcoin exchange rates, saying it is wrong and only gives people
unwarranted confidence in the predetermination of exchange rate movements.

Investors
are buying bitcoin despite the market’s decline. According to CoinShares,
crypto funds saw capital outflows of $39m last week, while there were inflows
of $28m into BTC.

 

Investors
have, in our view, false confidence in their strengths. It is commonly believed
in the media that retail investors were the first to buy out the 2020 bottom
and who managed to beat the funds in 2021 using the r/wallstreetbets forum.

 

But then the
Fed and many other central banks, along with governments, were on the buyers’
side, conducting unprecedented policy easing and handing out monetary stimulus.
Now they are doing the opposite: rolling back support programmes and raising
rates at the highest rate in decades.

 

Retail
shoppers risk being caught swimming against the financial current, which is
hardly a successful strategy. History suggests that enthusiasts risk running out
of steam soon, being left with depreciating assets, and losing confidence for
years that equity or cryptocurrency markets are a worthwhile place for their
money

 

This article was written by FxPro’s Senior Market Analyst Alex
Kuptsikevich.

This article was written by FxPro FXPro at www.forexlive.com.

• The new tool should be different as circumstances are not the same
• It will be different from PEPP, APP or OMT programmes

The OMT was designed to cater more towards a crisis of solvency a decade ago and that isn’t exactly the main challenge that the ECB is facing right now. It is arguably the tool that has the closest set of characteristics desired by the central bank to counter fragmentation but it offers up a lot of political challenges as well. Don’t expect Italy to sign up for any of that.

Ideally, the new tool should come with the right kind of economic components offered up from the OMT but without the political stipulations. It is going to be hard to do that while having to navigate backlash from its own members, especially Germany. So, we’ll have to see how creative policymakers can be in the weeks/months ahead.

This article was written by Justin Low at www.forexlive.com.