Downturns to Hit the Crypto Markets Following Russia’s Pipeline Shutdown
If you're buying ETH into this dip, you should be aware of a few things, Let's explain this recent downturn. Well for one, we saw Russia announce future shut downs of the Nord Stream Pipeline for maintenance recently. This pipeline is responsible for delivering Europe's natural Gas supply.
What does this have to do with ETH?
We've seen this story before, Let's see if Russia turns it back on. This means increased energy prices. Increased Energy prices means stronger Dollar and elevated Inflation. If we start the upward trend in inflation again, it'll be nasty Flat out.
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The 10 years treasury yield climbed above 3% for the first time in a month as investors bet on an extremely "Hawkish" tone from the Fed on Friday. The two years sold off even more. This is a flattening trade that tells markets one thing: Recession looming.
Hawkish = Quantitative tightening = more restrictive = interest rate hiking = bad for assets
Dovish = Quantitative easing = less restrictive = interest rate reducing = good for assets
For Technical Analysts out there, we saw Bitcoin set off some sirens as the Moving Average Convergence Divergence (MACD) turned negative. In short, this is just a momentum indicator.
This is what is happening right now;
We are in a momentum trade and we are following the rest of markets. No merge, no nothing, Just tracking Best Buy. No literally, we are literally tracking Best Buy's stock, We are in a Macro trade here being driven by momentum.
The VIX (volatility index) is soaring and we are seeing meme stocks unravel. If you want to have an idea where momentum is, just look at the stock prices of Draft Kings and Bed Bath and Beyond.
It was a matter of time before we saw a day like today in Equities and a sell off like we did in ETH this weekend. Markets are going to be volatile until Friday when Fed Chair Powell addresses the ever important rate hike decision which will set the tone for the next move.
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