Rising interest rates are killing equities markets. But it’s not only stocks that are getting hammered; it’s contrarian investment options like cryptocurrency too. Bitcoin – the erstwhile darling of the crypto world – has plummeted spectacularly in recent weeks. The declines in this speculative asset, and all of its brethren, are less about the future of crypto and more about a risk-off approach being adopted by investors. In recent years, Bitcoin pricing has paralleled the performance of the stock market. Bitcoin was booming when the Dow, NASDAQ, S&P 500, and other global indices were rallying during the prolonged bull market.
The unprecedented rise in price for Bitcoin was such that it briefly hit $65,000 plus per unit BTC before dropping to its current levels of around $20,000 +. Unfortunately, the plummeting price of BTC is a mirror image of what is happening in US financial markets. Equities have become persona non grata, and risky assets such as crypto, forex, CFDs, and the like are veritable pariahs of our time. When money tightening measures are implemented (such as interest-rate hikes), central banks effectively squeeze the liquidity out of the economy. The Fed recently initiated a massive and unprecedented rate hike, and central banks worldwide are set to follow.
How is all of this affecting Bitcoin?
The price of Bitcoin was approximately $47,000 heading into 2022. By June 15, 2022, the bottom fell out and the price hit $22,000. The BTC/USD technical indicators are largely bearish, owing to the risk-off approach in the financial markets. The oscillators are neutral, but the moving averages indicate a strong sell. The 20-day exponential moving average (EMA) is $27,242, while the 20-day simple moving average (SMA) is $28,326. By all accounts, the current price is substantially less than the longer-term MAs, indicating severe downward pressure on the price. Therefore, the pivot points are an essential indication of the future direction of BTC/USD.
Bitcoin is Down 50% since January
BTC is 50% down from its January 2022 value, and the crypto market tends to follow in Bitcoin’s footsteps. These massive drops are only going to accelerate. The players are certainly going crazy for coin – this time they’re dumping it. Jokes aside, there is little to celebrate in the way of traditional price appreciation and profit accumulation with crypto at this time. Not all coins are losing their appeal, though. There are still options that can provide a source of comfort and relief during these dire times.
In Asian culture, the inimitable gold coin has long since been an icon of tremendous value. Gold coins are precious, as evidenced throughout the Chinese zeitgeist. Despite the fluctuating fortunes of digital coins, the perception of gold coin value among the world’s populace remains intact. Gold coins are a precious keepsake irrespective of what transpires with Bitcoin and other crypto assets. We see evidence of this popularity all over the Internet, in wildly popular games like Coin! Coin! Coin! which is a tribute to Asian culture and its allure of gold coins.
While the markets currently eschew Bitcoin and its ilk, the same cannot be said of other coin-related investment and entertainment options available online. We can highlight several investment possibilities that are increasingly attractive in today’s climate:
- Precious coins are proving to be a safe haven investment during this extremely volatile period in history. These include investment-grade options (MS65-MS70) of the highest order.
- Gold, platinum, and silver coins as commodities tend to appreciate during inflationary times and serve as a hedge against a market downturn.
- For those averse to coins of all types, dividend-paying stocks still pay, despite falling stock prices.
- Stocks are a no-no, but ETFs with a basket of stocks are preferable since they mitigate risk and allow traders and investors to share in the collective gains.
- Government bonds are another option available to investors, particularly the US government Bond i-Series bonds with inflation-linked interest rates + fixed interest on the principle.
Crypto long traders are a rarity because nobody quite knows where the bottom is. Unfortunately, the price chart for Bitcoin is looking increasingly like the 16th-century tulip mania crash (which also lasted for about four years). Although Bitcoin was able to sustain a price of around $10,000 + from mid-2017 to the current day, there have been dramatic price fluctuations in that time. Dramatic lows have offset highs of $60,000+ through the $30,000 range, and are now in the low $20,000 range. It’s a lot to digest, and possibly one of many reasons people are staying away from these types of coins and opting instead for other light-hearted coin-style entertainment!
