Recently, there has been an incredible correlation between the cryptocurrency markets and the top stock indices in the United States. Famous crypto money expert Lark Davis shared with his followers 5 dangers that can affect many altcoins such as Bitcoin (BTC), Shiba Inu (SHIB) and Dogecoin (DOGE) in his latest video. As Kriptokoin.com, we convey expert opinions.
Here are the 5 factors that will affect BTC, SHIB and altcoins
The first big danger Davis pointed out is recession (recession). Recessions are a normal part of economies. When stock markets stagnate, many cryptocurrencies such as BTC, SHIB, and DOGE perform at their worst, usually from six months to a year before the recession hits. During a recession, cryptocurrencies can perform shockingly poorly. However, after the recession, we can see the markets recover quite quickly. The second danger to watch out for, according to the crypto expert, is interest rates. The Central Bank began raising interest rates. Markets may continue to drop and it will take a long time to return to old prices. Lark Davis, when the interest rate hike was announced, said the key point is that we tend to get positive returns after one year and continued his words as follows:
So the first 3 to 6 months can be turbulent, 6 to 12 months later we can get a positive return. . High correlation is good for cryptocurrency markets.
According to the analyst, another thing to be aware of is inflation. The current inflation rate is at its peak at 8.5 percent. Saying that stock markets have only a 48 percent chance of exceeding the inflation rate in a 12-month period, Lark Davis thinks that unless the FED really starts to reduce inflation in the very near future, cryptocurrencies like BTC and SHIB may underperform against inflation.
Inflation, conflict of interest and FED selling will also affect the crypto market
The fourth thing we need to pay attention to, according to the analyst, is the war between Russia and Ukraine. Ukraine is the largest producer of many important food products. People in countries around the world rely on these foodstuffs, and if Ukraine’s supply does not enter the market, there could be major disruption of political systems, major hunger crises. Therefore, it has far-reaching implications beyond the borders of Ukraine and furthermore, fuel prices will continue to rise, especially for goods transport.
The last thing we need to consider, according to the analyst, is that the Federal Reserve is raising the possibility of selling mortgage-backed securities. They announced that they will withdraw up to $95 billion per month from the assets they already hold. According to Lark Davis, the Fed will get rid of $95 billion monthly in assets, which means that once the treasury bills expire, they are not buying more. It wouldn’t be good for BTC, DOGE, SHIB, and altcoins if they started selling mortgage-backed securities, which could put huge pressure on the equity markets.
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