Cryptocurrencies Move Sideways but Outlook Remains Bright

17 Dec 2021 · 3rd Party Analysis

Cryptocurrencies Move Sideways but Outlook Remains Bright


In Summary:

  • Cryptocurrencies trade sideways to moderately lower on Friday with BTC near $48K
  • Outlook for growth remains bright with strong demand pushing for quicker regulations

What’s Trading in the Markets?

Cryptocurrencies like bitcoin and Ether are moving sideways to moderately lower levels on Friday. Market participants are likely looking toward some more relaxed trading environment as the Holiday period approaches.

To this end, the price of bitcoin, the world’s most valuable cryptocurrency, is now gravitating towards $48,000 per coin. Bitcoin has been under pressure during the whole week, with price muted below $50,000. Further, the original token is showing a weekly loss of about 5%.

Ether, the second-largest coin by market value, is also lower today. The Ethereum token posted a 3% decline early on Friday as price slipped below $3,900. In more detail, over the past two days, Ether has been showing some signs of weakness. The price has gone from a weekly high of $4,100 to a low of $3,850.

What to Expect in the Markets?

Despite this week’s drop, major crypto tokens still hold tremendous growth potential as we head into the new year. More specifically, mainstream adoption kicked off on a strong note this year and is expected to accelerate in the next one.

To this end, Wall Street is eager to welcome the first spot Bitcoin exchange-traded fund (ETF). This is likely to happen in 2022. A spot Bitcoin ETF would mean that investors will be able to buy genuine bitcoin. Presently, there are only Bitcoin futures trading on the US stock exchange. In other words, buyers hold futures contracts on bitcoin, and not actual bitcoin.

In addition, clients of major banks and financial institutions are increasingly demanding to be able to buy and hold cryptos. For this to happen, the US Securities and Exchange Commission, headed by Gary Gensler, is now working toward introducing regulations.

This said, the crypto market is expected to witness remarkable growth once US financial watchdogs implement guardrails over crypto assets.

Dive Deeper in the Financial World

Over to the wider financial markets, stocks and currency pairs today float fairly flat as traders still digest the Fed’s final meeting of 2021. US stocks fell on Thursday, led by declines in technology shares. Further, futures on the tech-heavy Nasdaq Composite point to more losses on Friday.

Market participants offloaded risk yesterday, resulting in a 2.5% drop for the Nasdaq. Also, the broad-based S&P500 slipped about 0.9%, while the Dow Jones ended lower by 0.1%.

The downward move reversed Wednesday gains, which were boosted by Jerome Powell, Chairman of the US Federal Reserve. In his speech, Mr. Powell noted the US central bank is preparing to double the pace of stimulus withdrawal.

In practice, the extraordinary monetary support of $120 billion a month will be reduced by $30 billion a month. Moreover, the Fed Chair said policymakers have decided to raise rates at least three times in 2022.

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