The crypto-currency index of fear and greed grounded at 34 by Thursday morning, having lost 14 points and turning into a state of fear. This is the lowest value in the last two weeks.
After several days of sliding, the fall of bitcoin accelerated amid trading in Europe, reaching two-week lows just above $43,000. The negative dynamic of the cryptocurrency market was facilitated by the fall of global stock indices. The published minutes of the Fed meeting showed tougher rhetoric than expected. That put pressure on all risk-sensitive assets.
News about the arrest of the servers of the darknet resource Hydra with the confiscation of 540 bitcoins, as well as sanctions against the Garantex crypto exchange could have a negative effect on the whole crypto market.
According to Glassnode, the number of bitcoins on exchanges has fallen to the lowest since August 2018. Investors have been withdrawing coins since the beginning of March, which is often taken as a signal to keep Bitcoin out of the market for a long time. This reduction in active supply often pushes the price up. However, now we are also seeing increased sales from institutional.
Reports that Tesla’s CEO Elon Musk had become Twitter’s largest shareholder initially caused Dogecoin to soar more than 20%, as Musk had previously used the coin to pay for small Tesla goods. Potentially, there could be more applications for Doge in Twitter. However, by Thursday morning its price returned to the levels of the beginning of the week, still showing that this “dog” is not yet able to swim against the current, just as Bitcoin cannot become a meaningful fish against a big pond of stock markets.
Bitcoin has been losing 2.5% within the last 24 hours, falling back to $43.6K. Ethereum lost 2.3%, with other top 10 leading altcoins varied between -5% (Terra) and +1% (BNB).
According to CoinMarketCap, the total capitalization of the crypto market sank by 2% overnight to $2.01 trillion.
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The lowering of political risks is attracting buyers of the single currency as EURUSD fell late last week to 1.0850 – near the lows of March and a support area in the pair between February and May 2020.
In 1997, the EURUSD (then still non-cash) was gaining support near this level, but a return to 1.08 two years later triggered a capitulation. The EURUSD sell-off then had only halted two years later after the single currency had lost a quarter of its value and only after ECB interventions.
The French elections and the events in Ukraine have enough potential to trigger a historic euro move away from that line.
A strong pullback under 1.0800 opens the direct road to 1.05 (pandemic lows), but it may only be the first step in a long-term slide of the single currency towards 0.8500.
The opposite is also true: the political détente in the coming weeks may fundamentally change the attitude towards the single currency, making purchases attractive in the long term from the current levels.
Investors and traders should pay close attention to the EURUSD in the coming weeks because the following dynamics will be decisive for the number one currency and the entire forex market for many months.