The US stock market closed higher on February 27, with the Dow rising by 72.17 points (0.22%) and the Nasdaq rising by 72.03 points (0.63%). However, market concerns about high inflation have intensified further. The Personal Consumption Expenditures (PCE) price index for last month, released on February 24, recorded 4.7%, significantly exceeding the market expectation of 4.3%.
Since February, US employment statistics and Consumer Price Index (CPI) figures have consistently exceeded market expectations, and a 0.5 basis point rate hike is now being factored into the next meeting of the Federal Open Market Committee (FOMC). There are also suggestions that the US policy interest rate could rise to 6.5%, which has reduced expectations of an early end to US rate hikes and put pressure on stocks and Bitcoin.
According to a weekly report by CoinShares, the flow of institutional investor funds into digital assets such as cryptocurrency investment trusts has fallen for three consecutive weeks, with a total outflow of $12 million. The main inflow destination is inverse (short) products, indicating that investor sentiment has been damaged by the recent strong macroeconomic data releases.
In the cryptocurrency market, Bitcoin fell 0.46% to $23,498, with resistance at $23,800, which is vulnerable to selling pressure. Ethereum also fell 0.7% to $1,632. According to blockchain analysis platform Santiment’s data, Ethereum stop-loss behavior is becoming more apparent.
Santiment tweeted that both Bitcoin and Ethereum had more traders selling at a loss than at a profit this week, the first such week so far in 2023. Historically, once the crowd is exiting their positions more frequently at a loss, bottoms are more likely to form. The MVRV Ratio remains positive, and the long/short ratio is also trending downward, indicating that those who are cutting losses are mainly short-term holders. The MVRV ratio is calculated by dividing Bitcoin’s market capitalization by its realized capitalization, and it is an indicator of the top and bottom of a bullish or bearish market.
Recently, the regulatory authorities have increased their scrutiny of cryptocurrencies, mainly due to the impact of the collapse of the major cryptocurrency exchange FTX in November last year.
At the G20 meeting, chaired by India, Georgieva, the director of the International Monetary Fund (IMF), stated that “the option of banning cryptocurrency trading should not be excluded, keeping financial stability risks in mind.” Janet Yellen, the US Treasury Secretary, also argued that “strong regulatory frameworks are necessary for cryptocurrencies.” However, she left the possibility of a comprehensive ban open. Gary Gensler, the chairman of the US Securities and Exchange Commission (SEC), suggested in an interview with New York Magazine that all cryptocurrencies except Bitcoin may be considered securities, and the SEC…
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- Digital Asset Investment Products See Significant Outflows Of $32m, The Highest Since Late 2022 : CoinShares