Edward Moya, the senior market analyst at Oanda, noted that crypto markets had been highly correlated to indexes such as the Nasdaq. He observed that the tech-focused index is down 21% this year, while Bitcoin is down 22%. Moya added that confidence is low, and the asset has been mainly consolidating for most of this year:
Institutional interest cooling The year 2021 was extremely bullish for institutional crypto investment, but that has not carried through to 2022. Big names such as Tesla, MicroStrategy, El Salvador, and several payment platforms got into crypto, driving the momentum and buying pressure. U.S. regulators even allowed the first Bitcoin futures exchange-traded funds to trade which was also bullish.
Bull Bear Cycles Finally, crypto markets are cyclical; what goes up must come down. There have been four distinct bull/bear markets since Bitcoin’s inception more than a decade ago. If previous cycles are anything to go by, crypto markets may remain bearish for the rest of this year and into 2023 before turning around again.