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12 February 2022: The latest market rally that saw gains of over 38% from bottom to peak seems to have stalled. At this point there are any number of reasons to choose from on why selling may continue. With so-called "smart money" stepping in to secure profits, another leg down looks increasingly likely (especially looking at you Bitcoin).
A rally in US bond markets sparked an overall decline in the stock market which coincides with the decline in the cryptocurrency market. With inflation running especially hot and tensions reaching a tipping point in Eastern Europe, all signs point to some more short term pain in all risk-on markets.
In a rush? Here are this week's key takeaways:
- Markets resume decline after 38%+ rally
- Pressure remains on FED to raise rates amidst record high inflation numbers
- Tensions rising in Eastern Europe between Russia and NATO / US
Top Headlines
After the chaos of last week's major security breaches, this week has been dominated by rapidly increasing inflation and the potential for a major war in Eastern Europe between NATO and Russia over Ukraine. Countries have officially been putting out the call to evacuate Ukraine as the US and its allies continue to bolster troops in Eastern Europe.
The situation has escalated substantially in the past several days. The United States has stated that an invasion of Ukraine could be expected "before the end of the Winter Olympics on Feb 20". Just the threat of another major war in Europe has absolutely contributed to unsettled volatility in all markets, stocks & crypto included.
On the quiet side of this week was the loss of at least 40 different Starlink satellites a rocket launch failure due to a geomagnetic storm. While space weather of this magnitude is relatively common, losses of this level are rare. This will be the subject of another article coming soon, so keep an eye out for that if you're interested.
BlockFi was in the headlines recently after being hit with a $100 million USD fine from the SEC. This isn't even to mention that the United States now holds $3.6 billion USD in Bitcoin after a seizure from the Bitfinex hack.
Further Reading - In the Know
Tensions rising in Eastern Europe as world prepares for war (Aljazeera
BlockFi hit with hefty $100 million USD fine by SEC (
US seizes over $3 billion USD in Bitcoin from Bitfinex hack (Bloomberg
Inflation sits at 7.5% for January 2022, multi-decade high (
- 40 Starlink satellites destroyed in geomagnetic storm (Business Insider
Crypto-Economy & Markets
The cryptocurrency market is down 5% since our last release on Monday, February 7th. Overall market sentiment remains in the fear level at a score of 44 points, per the Fear & Greed Index.
From the very bottom to the top of this latest rally, the Total Crypto Market increased by 37.4%.
Fear & Greed Index
Total Market
After a 5% loss since Monday, the Total Crypto Market stands at $1.88 trillion USD. A return to support at $1.6 trillion is growing in probability, so approximately $300 billion USD could be shed from the market in the coming days and weeks.
Bitcoin declined a relatively shallow 4% over the past week after the market experienced extended volatility.
Bitcoin is currently attempting to use the 50 day moving average mark for support. This point will be discussed in the analysis below.
Alt Coins
The altcoin market (total crypto market cap minus Bitcoin) is sitting right around a $1 trillion market cap. Ethereum had been the main source of relief during the latest rally, but with Ethereum declining back under $2,900, the altcoin market looks shaky once again.
Once again, a key area to watch on Ethereum is the $2,400 level. Should we see a bounce there, that could be a potential double-bottom / buying opportunity. Otherwise, major pain could be coming for alts with long term weekly support at the $1,000 level.
The total market cap, minus Bitcoin, is shown below:
Total Crypto Market Analysis
There are some really good bullish arguments circling the space right now. There is even a potentiality that an asset like Bitcoin actually appreciates during real world extended conflict such as the Ukraine crisis. This is speculative at best, but with Russia approving the recognition of cryptocurrencies, assets like Bitcoin give Russia avenues to completely avoid the USD.
For the majority of institutional investors, both stocks & cryptocurrencies still pose risk-on assets. With the Federal Reserve dangling the possibility of short term rate hikes and Russia & Nato seemingly gearing for war, many institutional investors may choose to do the smart thing and disengage from riskier assets after such a long period of high returns.
Be prepared for anything. This is still a good accumulation zone long term and more than likely an opportunity for many late buyers to dollar cost average down on initial investments.
First and foremost, RekTimes is hopeful that a peaceful resolution is found in Eastern Europe and would like to extend our thoughts and well wishes to our fellow humans there.
With the global economy cracking under the weight of two years of unprecedented stimulus, now is the time to have plans in place in which to secure your financial future for the next three to five years. As was stated last week, Ethereum & DeFi is notoriously undervalued for long term applications & usage.
Extended downtrends in the cryptoeconomy should be viewed as massive accumulation opportunities. As more development, job growth, and increased stability continues to show in the cryptoeconomy, it is not outlandish to imagine an independent, stable cryptoeconomy powered by DeFi standing as a direct counter to fiat in the near term.
Here are a few things we will be watching over the next week
- Bitcoin & tech stock correlations
- Ethereum & altcoin vs Bitcoin gains
- Geopolitical updates from Ukraine
Things got hectic this past week, so the listed articles below are the same from last week after some delays. Thanks for all your support!
Coming up over the next week from RekTimes includes:
- Article on DeFi and long term applications
- Article on macro economic trends
- RekTimes Weekly Markets 1.26
Best of luck over the next week!
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