- Cryptocurrencies have been under pressure in the past few weeks.
- An analyst warns that Bitcoin and Co faces a major challenge.
- He also warned that Ethereum will not overtake BTC in the near term.
Cryptocurrency prices have had a rough patch in the past few weeks as concerns about digital currencies remained. Bitcoin plunged below the important support at $26,000 while the market cap of all cryptocurrencies is hovering slightly above the key level at $1.02 trillion.
Rising money market yields
The main concern among investors is the rising interest rates in the United States. The Fed hiked rates from zero during the Covid-19 pandemic to 5.50% and analysts believe that it will hike by 5.75%.
As a result, mortgage rates have jumped in the past few months. Data shows that the average mortgage rate has soared to above 7%. And this week, yields of the 10-year and 30-year jumped to the highest level in more than a decade.
Most importantly, money market funds have been rising. As a result, many people have started shifting their funds to these financial assets. This is evidenced by the fact that deposits in American banks have been in a downward trend in the past few months.
This is happening at a time when the American economy is slowing. And most importantly, there are concerns about the upcoming student debt market. Analysts expect that stocks and cryptocurrencies will continue struggling in the coming months.
The next key catalyst for crypto price will be the upcoming meeting in Jackson Hole Summit in Wyoming. In it, central bank officials will deliberate on the next decisions. Analysts expect that Jerome Powell will sound a bit neutral.
Analyst warns about crypto prices
It is against this backdrop that some analysts are warning about cryptocurrency prices. As I wrote here last week, I warned that Bitcoin price would have a bearish breakout. I pointed to the double-top pattern that formed on the daily chart. And in this article, I warned that BTC had formed a bearish flag pattern on the 4H chart.
In an emailed note, John Glover, the founder of Ledn and a managing director at Barclays, said:
“Both the technical and fundamental outlook for risk assets, including BTC and ETH, are pointing to softer prices in the coming weeks. When the techs and the fundamentals align, the market prices tend to follow. I look for BTC and ETH prices to soften further in the next couple of months.”
He also warned that Ethereum has little chances of crossing Bitcoin in the near term despite the growth of its ecosystem. He said:
“BTC has steadily outperformed ETH since Dec 2021, aside from a summer 2022 rally in ETH. While I’m not a self-declared “Bitcoin Maxi”, the market has been stating clearly that investing in BTC is favored over ETH for the past 2 years. I personally don’t see anything on the horizon that will change that in the short term."
Therefore, if these predictions on Bitcoin and Ethereum are correct, there is a likelihood that other cryptocurrencies like Litecoin, Cosmos (ATOM), and Chainlink (LINK) will also drop.
