Cryptocurrencies continue to crash as Bitcoin slipped below $25,000 and Ethereum broke important supports, dropping below the $1,300 level. Almost all altcoins are wiping out gains made in 2020 and continued in 202 as sentiment around cryptocurrencies was worsened on Friday by alarming data from the US economy (record low investor sentiment according to data from the University of Michigan and a higher than expected inflation reading). It is not very surprising to see such a strong downturn as we have noticed an increased correlation over the last few years between traditional stocks, which have also tanked recently, and the cryptocurrency market. Furhtermore, there appear to be some fundamental problems also as the Ethereum network struggles after Ethereum's developers announced on Friday another postponement of the transition to the long-awaited version 2.0 and thus also the date of the 'difficulty bomb' that investors are waiting for. At the same time, Bitcoin which is the largest of the cryptocurrencies, is currently fighting to remain above this year's lows as a fall below these levels may trigger a cascading effect of liquidations of hedging positions, which could potentially lead to a continuation of the downtrend. Despite this overall uncertainty in markets, investors will be keeping a close watch on this week's central bank decisions, particularly the FOMC, which could have significant impacts on the majority of asset classes, including cryptocurrencies.
UK GDP figures disappoint
UK GDP data for April was a noteworthy release as it showed a weaker-than-expected economic growth with GDP falling by 0.3% in April 2022, after a decline of 0.1% in March 2022; Production fell by 0.6% in April 2022, driven by a fall in manufacturing of 1.0% on the month, as businesses continue to report the impact of price increases and supply chain shortages. In addition, this is the first time that all main sectors have contributed negatively to a monthly GDP estimate since January 2021. As a result, we saw some noticeable pressure on GBP initially, while stocks extended the downward move brought by worsening overall market sentiment.
