The end of the week shook equity and cryptocurrency markets. Bitcoin and Ethereum crashed below significant support levels in the early European trading hours. BTCUSD slides under $22,000, and ETHUSD is heading at the $1,700 resistance.
India’s NIFTY50 ended Friday trading -1.4%; London, Frankfurt, and Paris are all in the red. US futures also hint we could have a problematic trading session in New York.
First, investors see ambivalent signals from the Federal Reserve about the future interest rate policy. On Thursday, the markets rose, but the rally wasn’t enthusiastic. The labor market is doing well, and manufacturing is accelerating. Why there’s no significant uptrend?
The Fed minutes were released on Wednesday. The central bankers agreed to continue raising the interest rates to cool inflation. They also said the hikes could slow down if the economic data justified them. These are very mixed
The gains followed the release on Wednesday of the minutes from the Federal Reserve’s July 26-27 meeting, at which Fed officials agreed they needed to keep raising interest rates to cool inflation but indicated the pace of those hikes could slow if economic data supported such a move.
This is a mixed messaging that leads to confusion in the markets. The next meeting is set for about one month, which means we can witness a more extended period of uncertainty.
With stock markets at the crossroads, cryptocurrencies chose the way down. On Friday, the major coins crashed. Bitcoin fell by 3.27% in less than 5 minutes, hitting $21,365 at a point. Ethereum Classic was on a solid uptrend before the ETH 2.0 Merge coming in September, lost 12% in the last 24 hours. Cardano and ApeCoin were also among the heavy losers shrinking by over 7%.
Forex markets hint at the possibility of a global recession. While equity markets dive, the dollar is once again the sought-after asset. Euro and yuan are losing ground against the US currency, which hints at a risk-averse sentiment before the weekend.
This will be an interesting Saturday and Sunday for futures and cryptocurrency. It’s an excellent opportunity to profit for SimpleFX traders. Make sure you trade with us in the next two days.