Crypto Investors Refocus on the Stock Market To See if the Worst Is Over
After a wave of turmoil and existential anxiety, digital asset investors are turning their attention to sentiment in the U.S. stock market to gauge whether the worst is over.
Bloomberg Intelligence analyst Mike McGlone said cryptocurrencies would perform better if the stock market had bottomed out. Nothing is more powerful in the market than the first half of the year when the stock market fell at high speed, and cryptocurrencies are part of it.
The trend is not uncommon this year, and stocks and cryptocurrencies have moved similarly. The backdrop is the hawkish Fed's determination to rein in 40 years of high inflation, which is the source of volatility across various assets in 2022.
But whether stocks and cryptocurrencies have bottomed is a question no one can know for sure — bottoms are only seen after the fact, and they all have the potential to re-trend lows later this year or early next year.
Cryptocurrency research firm Glassnode found Bitcoin's active addresses are in a well-defined descending channel. New demand remains low, said the report, based on network activity. Furthermore, the transaction demand has trended sideways or downward in recent weeks, which suggests only traders and investors remain confident a higher base will remain. In addition, on-chain transaction fees are in a bear market, and if they pick up, it could be a sign of recovery.
