by BSC News
June 5, 2022
Conviction of market participants has been severely tested as the crypto market continues to slide in the absence of fresh catalysts.
Bitcoin ($BTC) is struggling to stay above the crucial $30k mark as market exploits, and network stability issues continue to haunt the crypto industry.
There are a few key factors that are leading the market sentiment. First is the failure of the Biden administration to push for regulatory clarity for the crypto industry. Secondly, the Federal Reserve’s (FED) decision to reduce its balance sheet will negatively impact the equities market.
If the Fed is not careful with this delicate balancing process, it may lead to a similar consequence to the 2013 tapering exercise that threw the financial market into disarray. This time, the US is facing other equally concerning issues such as rising living costs, geopolitical tension in Eastern Europe, and the supply chain crisis.
The crypto market needs fresh catalysts to turn the market around. These catalysts must be impactful to spur investors’ interest. One such possibility is the launch of Bitcoin spot Exchange Traded Funds (ETFs).
Long-term holders can start accumulation as the risk of further downside is limited. The best strategy to adopt is the dollar-cost averaging (DCA) method.
Sentiment has not improved from last week. The US economy looks bleak as the Fed is set on reducing its balance sheet. In addition, the crypto market is still reeling from the Terra Luna’s meltdown after-effects.
There is fear that regulators will start clamping down on stablecoins or use the $LUNA-$UST Fiasco as a reason to impose stricter regulations. Japan was the first to respond after its parliament passed a bill into law to regulate stablecoins.
Inhibitory laws do not augur well for the crypto space. It stifles innovation. The current regulatory framework that deals with digital assets and securities is enough to preserve market integrity.
This market cycle presents one of the best opportunities to buy. This time around, the crypto market is more robust and has more value propositions as an emerging asset class.
Come back next week for another iteration of Weekly Digest: Chung's Picks of the Week from BSC News. Be sure to follow Chung Yee on Twitter.
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