Synopsis
- The Fed’s monetary tightening hints at a bumpy couple of weeks ahead for the broader financial market.
- US debt-ceiling deal approved, reducing market fears over a potential US default.
- Speculation persists around whether the Federal Open Market Committee (FOMC) will increase interest rates in June or July.
- The crypto market’s growth lags the equity market, despite a 2% ($24B) increase in total crypto market cap last week.
Key Observations
In our previous report, we had anticipated the crypto market displaying bearish behaviour. And Major coins, including Bitcoin, Ether, and XPR, contributed 80% to the market cap increase.
Although the nearest support level seems strong, there are certain macroeconomic events that can play a pivotal role in shaping the market this week.
Analysis
The bearish trend in the crypto market corresponds with the Federal Reserve’s tightening of monetary policy. However, market anxieties have eased following the approval of the US debt-ceiling deal by the US Senate and President Biden, mitigating fears over a potential US default.
Market response to Federal Reserve actions:
The crypto market could react to any further tightening or easing measures by the Federal Reserve. Changes in monetary policy may influence investor sentiment and potentially impact the prices of cryptocurrencies.
The approval of the US debt-ceiling deal is likely to bring temporary relief to the market, reducing concerns about a US default. This could contribute to a more positive investor sentiment and potentially lead to a short-term stabilization or even a slight recovery in the crypto market.
Overall, investor sentiment will play a crucial role in the market’s direction. Positive news, adoption by major companies or institutions, or favorable market trends may boost confidence and potentially drive upward momentum. Conversely, negative news or bearish market sentiment could result in further downward pressure on crypto prices.
Concurrently, speculation is high around the potential decision by the FOMC to increase interest rates in the upcoming months, given the robust job market but slowed wage increases and inflation. This decision can significantly influence crypto markets.
Deep Dive into the Top Gainer and Loser
We closely analyze the performance of the top 50 coins by market capitalization, and take a closer look at the best and the worst performers of the week.
Top gainer of the week: Ripple (XRP) up by 3.2% ⬆️
XRP, up by 3.2%, saw a market cap influx of $3 billion over the past week. This surge is largely credited to the impending legal victory against the US SEC and the potential of an IPO.
Opinion
Fundamental analysis: The impending legal victory and the potential IPO boosted investor sentiment, driving up the market cap.
Technical analysis: Oscillators indicate mixed signals, with 1 bearish and 1 bullish. Moving averages are more positive, with 12 bullish, 2 bearish, and 1 neutral.
Biggest loser of the week: Algorand (ALGO) down by 6.39% ⬇️
HEX, an ERC20 token on the Ethereum network, aims to replace the Certificate of Deposit in traditional finance. It is down by 22.08% this week.
Opinion
- Fundamental analysis: Despite its innovative goal, the price has declined, suggesting a short-term negative sentiment.
- Technical analysis: Oscillators are leaning bullish with 3 bullish and 0 bearish, while moving averages are strongly bearish. This combination indicates a bearish trend in the short term, with the potential for a bullish reversal.
Conclusion
As we look to the week ahead, the crypto market remains significantly influenced by broader financial trends, including the Fed’s monetary policy and potential changes in interest rates. Despite a generally slower pace of growth compared to the equity market, some cryptocurrencies, like XRP, have outperformed. Investors should keep a close eye on these developments, as they could provide interesting opportunities in the coming week.
