Crypto markets continued to slide on Wednesday in response to Fed Chair Jerome Powell’s statements late last week. With current macroeconomic concerns and the perceived risk-on nature of digital assets, it may take a while for the markets to recover from the long winter.
Major Alts Slip By 5% As Bitcoin Struggles
Bitcoin tanked by 5.75% on Wednesday as the markets factored in Powell’s Hawkish comments on Tuesday, closing below $31k. However, the major digital asset has since recovered above the $29k price point but still struggles at the $30k threshold.
The downside volatility continues as Bitcoin moves in Tandem with risky tech stocks on the Nasdaq. Powell on Tuesday had stoked the general risk-off sentiment as he disclosed that the Fed plans to continue tightening measures till inflation declines.
“What we need to see is inflation coming down in a clear and convincing way, and we’re going to keep pushing until we see that,” said the Fed chair.
On Wednesday, the bearish pressure also extended to major altcoins. Notably, Solana’s SOL, Cardano’s ADA, and Polygon’s MATIC dropped by 5% in the last 24 hours, while Ethereum’s Ether, Polkadot’s DOT, and DOGE dropped by over 4%.
The Market Outlook
Last month was tough on the crypto markets, with over $40 billion wiped off the markets following the crash of the Terra ecosystem, even as Bitcoin now looks to continue its longest bearish streak ever, now past seven weeks. In addition, the crypto markets currently appear to be succumbing to pressures from macroeconomic concerns, regulatory uncertainty, and stablecoin fears.
Bitcoin’s continued correlation with equity markets has seen the crypto market struggle to perform at Q4 2021 levels this year. Consequently, the markets may be in for more downsides with the Fed’s continued hawkish measures.
However, some analysts still think that the only way left from here is up amidst all of these concerns. For example, veteran trader Peter Brandt who has successfully predicted Bitcoin’s price movements on multiple occasions believes we may have already formed a price bottom at $27k. Notably, as reported by ZyCrypto, crypto funds saw the year’s highest inflows in the past week as investors like sharks smell blood.