on the crypto
Just over six months ago, and a few days after bitcoin reached its highest levels ever, around the $ 69.000 mark, Yves Lamoureux launched the now famous appeal that cryptocurrencies were heading for a bear market. .
Lamoureux, president of the macroeconomic research firm Lamoureux & Co and sometimes referred to as the "Canadian whale", got his prediction right last November. From record highs in November, bitcoin has plummeted by more than 56% to current levels of just below $ 30.000.
Did the Fed unleash all this?
Over the same period of time, the broader cryptocurrency market plunged from all-time highs just above $ 3,0 trillion to current levels of around $ 1,28 trillion, down about 58%.
Cryptocurrencies have been hit hard by a sharp rise in US short- and long-term yields (which increases the opportunity cost of holding unprofitable assets such as precious metals and cryptocurrencies), as well as a sharp decline in US tech stock valuations ( cryptocurrencies have become increasingly correlated with the US tech sector in recent months).
Triggering these unfavorable macro trends was the rapid change of direction of the US Federal Reserve. If last November the central bank was convinced that inflation would prove "transitory" and that no rate hikes would be needed until 2023, it has now realized the mistake made.
The bank kicked off a cycle of hikes with a 25bp move in March, followed by a 50bp hike earlier this month, and officials promise to continue with further rate hikes to address the issue. inflation, which currently stands at an annual rate more than four times the bank's target of 2,0% (according to CPI data from April last week).
Is the winter of cryptocurrencies coming to an end?
Despite the threat of further / more rapid monetary tightening by the Fed, which many strategists say could cause further suffering in the equity and cryptocurrency markets and a further rise in US yields, this week Lamoureux called for the end of the so-called "winter of cryptocurrencies, ”as Yahoo Finance reported Wednesday.
"I see extreme (negative) sentiment from cryptocurrency holders, just as we have seen in other downturns," Lamoureux reported, adding that the 80% drawdowns seen in the past on bitcoin are no longer needed to shake up currencies. weak hands.
Describing the phases of the recent bear market, Lamoureux said that "instead of one big crash, bitcoin broke into two parts, creating fewer falls than a traditional drawdown."
Much of bitcoin's decline since last November has occurred in mid / late January, with the cryptocurrency only recently dropping below these lows and below $ 30.000 in the wake of the collapse of TerraUST and LUNA - here the quotation in real time.
“It looks complete in terms of the bear market,” Lamoureux said
Given the close correlation between the US tech sector and cryptocurrencies, the Nasdaq 100 Index is likely to need some respite if bitcoin and other cryptocurrencies are to have a significant recovery.
But Lamoureux is optimistic about the US tech sector. “I don't often get fully invested… (but) now I am”, he said, before adding that “as inflation falls, technology products will reflect strongly… Beware of FOMO”. Lamoureux recently called for a three-year stock bull market.
