FS Investments Chief Market Strategist Troy Gayeski believes that Bitcoin and altcoins will face a bigger sell-off. Meanwhile, there is an expert who thinks that the worst times for Ethereum (ETH) will be seen in July and August. Here are the details…
Is the selling pressure continuing for Bitcoin?
FS Investments Chief Market Strategist Troy Gayeski believes cryptocurrencies could face further selling pressure if growth in the money supply goes negative. The US Federal Reserve’s (FED) shrinkage of its balance sheet will be a major bearish catalyst for Bitcoin. “You should never have more crypto than you can tolerate losing,” Gayeski said.
As we reported on Kriptokoin.com, Bitcoin is currently changing hands at just over $20,000 after losing its latest gains along with US stocks on Tuesday. Still, according to Gayeski, crypto is one of those asset classes that could potentially increase fivefold in the next four years. Currently, Bitcoin is down more than 70 percent from its record level, according to CoinGecko data.
Expert: Market should be ready for another drop
Ethereum’s latest crash has created fear among all investors in the market, especially as the second-largest cryptocurrency in the market plunged below the $1,000 threshold. Some investors believe that ETH has not bottomed yet and the market should be ready for another drop. Daniel Cheung, co-founder of Pangea Fund, believes that July or August could be the worst months for cryptocurrency. According to the fund manager, the market is currently in “macro trading” mode as the crypto industry tracks macro trends such as inflation. Ethereum is trading at 0.8 correlation with the Nasdaq.
This suggests that the cryptocurrency is almost “blindly” following trends in traditional markets that are unlikely to recover in the next few months, given the growing hawkishness of the Fed and the unexpectedly high inflation. Cheung also thinks that Ethereum will be a liquid bet on the Nasdaq. That is, he adds, that investors can gain exposure to the traditional market through the cryptocurrency, which almost replicates its movements in the market. Due to the high correlation with the Nasdaq, Cheung believes ETH will follow when the markets feel the pressure of rising rates and continued inflation pressure or even a possible recession.
As of now, the stock market is down around 30 percent from its latest record, but it has lost 45 percent from its 2008 record in an even more uncertain environment. This makes Cheung believe there is room for a substantial decline in the coming months or after the next rate hike.
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