LMAX Digital’s Perspective on Current Crypto Market Weakness

Joel Kruger of LMAX Digital contends that the current weakness in the crypto market is primarily due to a “sell-the-news effect” and overdue technical correction. However, the situation is more complex, as uncertainty surrounding the US economy’s future is triggering a risk-off sentiment.

YouHodler’s markets chief Ruslan Lienkha emphasizes that last year’s performance demonstrated bitcoin’s consolidation phase could persist for several months before the next rally. He warns that the present market conditions are more complicated.

> “Pessimism has prevailed in the US stock market, and concerns about a potential recession in the US are growing,” Lienkha remarked in an email. “Given these factors, the current consolidation phase could evolve into a medium-term bearish market.”

Donald Trump described the economic climate as a “period of transition,” adding to the concerns. The S&P 500 and Nasdaq Composite indexes were reported down 2.8% and 4.3%, respectively, as of 2:10 PM ET.

Despite this, Kruger believes that bitcoin is approaching a bottom, expecting a recovery in Q2 and stating that the asset should remain well-supported within the previous resistance range of $69,000 to $74,000. He previously mentioned that BTC’s store-of-value narrative might help detach it from “misleading” correlations with traditional risk assets.

However, Lienkha argues that while bitcoin could develop into a hedging asset in the future, it is currently viewed as a high-risk investment, often responding to broader market sentiments even more intensely than traditional financial markets.

Thus, monitoring the stock market will be crucial as the European Central Bank cut rates for the sixth time recently, with observers awaiting the potential impact of economic data on the Federal Reserve’s rate-cutting trajectory. The ripple effects of these changes are being closely watched.