Week Ahead: Crypto rebounds on Friday after volatile week, Luna collapse added to risk aversion
This week, BTC dropped below 26K as risk assets remained under pressure before recovering to above 30K price levels in volatile Friday trading. BTC recorded its first seven-week decline with Terra unravelling, lower risk appetite by investors, and a USD hitting 20-year highs. These major factors sapped crypto momentum all week before a solid rebound on Friday. Terraform labs pitched a revival plan to distribute network ownership between UST and LUNA holders through 1B new tokens. Stablecoin contagion narrative is still in play as short-term credit markets showed a lack of stability, and regulators are moving to introduce stablecoin legislation. Scarce liquidity is a growing concern as investors are draining the global financial system.
The US dollar index crossed the 105 level for 2002 high and added to its sixth weekly gains as investors flocked to the currency as a safe-haven as the Fed keeps the foot on the rate hike pedal increasing the pThe US dollar index crossed the 105 level for 2002 high and added to its sixth weekly gains as investors flocked to the currency as a safe haven. The Fed kept the foot on the rate hike pedal, increasing the probabilities of a monetary policy mistake. Minutes from the Fed’s May monetary policy meeting are to be published this week, with the market on the lookout for more insights into the Fed’s rate hike path.
Stocks markets are in decline, with most US markets down for a sixth consecutive week, with equities also seeing Friday’s boost. Friday’s rebound sparked bounce attempt analysis with buy the dip takes. BTC’s bullish target is suggested at $33K if the current bullish impulse continues to hold. However, if it fails to materialize, a pullback at $28K is expected in the short term if there is no strong buying activity.
Major headlines included: LMAX hitting peak 2022 volume on Thursday. El Salvador is buying 500BTC. Nomura is offering BTC derivatives to clients in Asia due to institutional demand. Coinbase CEO said crypto to represent 15% of Global GDP in 20 years. South Korea to introduce new cryptocurrency laws by 2024. Sam Bankman-Fried bought a $650B stake in Robinhood. India’s central bank issued comments against the Supreme Court that revoked its crypto ban but has not filed any appeals against the order. Coinbase confirmed this week the RBI had issued a shadowban on crypto.