“Volatile trading in digital assets has not been that unusual in previous years,” said Michael Kamerman, CEO of trading platform Skilling. “Cryptocurrencies are increasingly moving in sync with tech stocks with investors treating both as risk assets and often retreating to safer corners of the market during bouts of market volatility.”
Kamerman said he is still bullish on bitcoin for the long term. More hedge funds and other big institutions are starting to invest in crypto, and some global central banks are beginning to embrace it too.
But he added that “bitcoin is not immune to the global inflation risk spreading across most other asset classes. Therefore we should expect to see the downward trend continue.”
Bitcoin hit by the same problems dragging down stocks
As rates (and the dollar) continue to climb, some crypto skeptics think the selling in bitcoin has only just begun. The Federal Reserve is starting to pull back on monthly bond purchases and other stimulus which could be bad news for all sorts of speculative assets.
Hatfield said he thinks bitcoin could plunge as low as $20,000 by the end of the year.
Investors may continue to shun volatile cryptos in favor of safe havens, such as dividend-paying blue chip stocks.
Traders are “more reluctant to adopt the additional risk associated with the crypto sphere,” said Tammy Da Costa, an analyst at DailyFX, in a report.
She added that “the future of individual coins or tokens remains dubious” and that “interest rate hikes are likely to jeopardize the short-term potential for profits” in bitcoin, ethereum and other established cryptos.
Read More: Bitcoin tumbles more than 50% below its all-time high as crypto plunges again