Finance

Profit-taking, monetary policy tightening affect cryptocurrencies

Published

December 29, 2021

Cryptocurrencies prices have declined due to profit-taking operations and the anticipation of tightening central banks.

The market value of digital currencies decreased, on Tuesday, by 3.15%. It reached $2.32 trillion, with a trading volume during the last 24 hours that recorded about $95.58 billion.

Investors’ appetite for risk is increasing. Investors are awaiting to know whether the central banks’ tendency to reduce liquidity in the markets will pose greater challenges to the demand for cryptocurrencies.

Cryptocurrencies

“I view Bitcoin as a high-beta risk asset,” said Ross Mayfield, an investment strategy analyst at Baird.

“When risk appetite is up, it’s up big. And when risk appetite is down, it can be down big. It’s not perfectly correlated, that’s definitely too simple of a read, but it’s certainly not a volatility hedge,” he added.

A technical study shows that Bitcoin has breached the upper bound of a so-called pennant technical pattern. It scaled its 20-day moving average, according to the study.

While this points to the possibility of more gains ahead, other technical signals are identifying the $53,000-55,000 area as a potential test of the rally’s strength.

Cryptocurrency-related stocks in Asia, such as Woori Technology Investment, Remixpoint, and Ceres, received a big boost from Bitcoin’s recent performance.

The Cryptocurrency rose by nearly 76 percent since the beginning of this year. And it is heading to achieve further gains for the third year in a row.