Stock selloff resumes, bitcoin nears USD 30k

Risk aversion sends Wall Street lower

Wall Street remains uninspired to ‘buy the dip’ as inflation seems poised to remain stubbornly high, which will force the Fed to tighten policy to levels that will jeopardize the soft landing most traders were expecting. ​ No one can confidently answer the question of when stocks will hit the bottom, but if the options market is the primary focal point for many traders, that could suggest downward pressure on stocks could last a while longer.

Too many investors are in risk-off mode and targeting a deep bear market for tech stocks. The problem for tech stocks is that a lot of companies will struggle with rising costs as they pay their employees with equity. ​

Stocks extended declines after the NY Fed survey showed longer-term inflation expectations jumped, prompting fears of weaker growth that likely lead to a recession. The inflation expectations for three years from now increased from 3.7% to 3.9%. ​ The one-year inflation expectation fell from 6.6% to 6.3%. ​ ​

Bitcoin

Bitcoin is breaking below some key technical levels as the never-ending selloff on Wall Street continues. ​ The institutional investor is paying close attention to bitcoin as many who got in last year are now losing money on their investment. ​ If the USD 30,000 level breaks, that could trigger a flash crash environment if several whales unload. ​

Bitcoin’s long-term fundamentals have not changed in months, but growth/recession concerns have made this a very difficult environment for cryptos. ​ No one is looking to buy the crypto dip just yet and that leaves bitcoin vulnerable here. ​

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya