Investing.com – Investors' fears shifted to the cryptocurrency sector on Monday, with major assets such as and plummeting by more than double digits.
“Cryptocurrency prices are falling, but indicators suggest we are close to a bottom,” says Simon Peters, senior crypto analyst at eToro.
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“Risk assets plunged during Monday's Asian session as a weaker US jobs report and higher unemployment rate on Friday, as well as a rise in the Japanese yen following the Bank of Japan's recent interest rate hike, caused investors to flee risk assets,” Peters notes.
According to this expert, “ongoing fears that defunct cryptocurrency exchange Mt. Gox will repay its creditors and that Jump Crypto will liquidate hundreds of millions of dollars worth of crypto assets, especially Ethereum, have contributed to the sell-off in cryptocurrency markets.”
“However, technical indicators now appear to be oversold, as does the Crypto Fear and Greed Index, which flashes the word 'fear' – normally a signal that the price has bottomed – so we may see a bounce from here in the coming days. To know how far the price can go, we'll have to wait and see,” Peters says.
Key points
“The recent sharp drop in cryptocurrency and stock prices over the past few days can be attributed to a combination of macroeconomic and crypto-specific factors, although the former seem more influential at the moment,” agrees Javier García de la Torre, Country Manager of Binance Spain and Portugal.
“As it relates to cryptocurrencies specifically, the broad market downturn driven by recession fears has led to a reallocation of capital away from riskier assets, with digital currencies still largely perceived as such. This move has been exacerbated by the recent dynamics of the US presidential race, which some market participants view as potentially less favorable for cryptocurrencies as an asset class. Finally, in the cryptocurrency market, the summer months have historically been slower than other months of the year, with returns consistently lower. It is possible that these seasonal dynamics are also playing a role here,” adds García de la Torre.
“Despite these challenges, we do not see this as an indicator of a long-term negative trend for the cryptocurrency market. The Federal Reserve is expected to cut interest rates in September, which should improve the outlook for the US economy,” Garcia de la Torre emphasizes.
“Furthermore, with the presidential election still some time away, there remains significant potential for market fluctuations. As the election approaches, we are likely to witness market impacts in both directions as candidates clarify their stances on cryptocurrencies,” the Binance expert concludes.
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