Cataclysmic collapses in global equity markets are not ruled out for this year, with a “stagflationary shock” already underway.
Bitcoin (BTC) continued its downward trend into the March 6 weekly close, with geopolitical concerns and concomitant macroeconomic difficulties firmly in focus.
Could the year 2022 herald the start of a “Greater Depression”?
BTC/USD touched its lowest level in almost a week Sunday, according to data from TradingView, as overnight volatility resumed.
At the time of writing, the pair was in the process of testing the $38,000 support level, with three-day losses approaching 12%.
Despite the “after-hours” trading atmosphere, the trend for the largest cryptocurrency was definitely downward, as analysts’ sentiment on global markets shifted.
“Global equities have lost $2.9 trillion in market capitalization this week as a massive stagflationary shock looms,” markets pundit Holger Zschaepitz warned on the day.
The most exciting thing this year. Will be global markets collapsing. Any market that trades above 0 will be too high. They will call this. “The greater depression” which will be 10x worse than the Great Depression.
— Pentoshi 🐧 (@Pentosh1) March 6, 2022
“Economists reduced their growth expectations and increased their inflation forecasts. Global stock markets are currently valued $110 trillion, or 130 percent of global GDP, which appears pricey in the current environment “elationship.”
Should a more severe TradFi correction occur, some fear that an already fragile crypto market may fare just as poorly – at least initially.
Pentoshi, a well-known trader and analyst, even predicted a replay of the global breakdown that precipitated the Great Depression 90 years ago.
However, several established experts took a radically different position. Bloomberg Intelligence’s newest crypto market outlook study, published on March 4, remained upbeat on Bitcoin and Ether (ETH).
“While most assets will experience a decline in value in 2022 as a result of the inevitable reversion to the highest inflation in four decades, this year may represent another milestone for Bitcoin,” the report stated.
“Without a decrease in risk assets that alleviates some of the price pressure, inflation measures are more likely to continue strong, leaving central banks with few options but to raise rates aggressively.”
$36,000 in support may be plenty for BTC.
With caution still reigning in the short term, the picture for Bitcoin was bleak, with most optimistic indicators pointing to a continuation of the current trading range.
“Bitcoin is at a tipping point,” co-founders of on-chain analytics business Glassnode, Yann Allemann and Jan Happel, noted in announcing the current issue of their “Uncharted” newsletter.
“The RSI has reached an oversold level and is heading upward. If the price does not break through $40k, we will fall to support. $34-$36k in assistance $43-$45k resistance.”
The accompanying chart demonstrated how historically cheap BTC/USD is at current prices, as well as the association between such RSI lows and price reversals.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.