BTC falls below $40,000, famous investor says US stock market has a super bubble

At 10:00 on January 21, the market showed that BTC fell below $40,000 and ETH fell below $2,900. This was a rapid decline after Bitcoin once jumped to more than $43,000 in the early morning of the 21st. The market panic and greed index was 19 (yesterday was 24), and the panic level increased compared with yesterday, and the level was extreme panic.

Market analysts pointed out that the decline reflects continued pessimism about the economy and rising interest rates, and reflects bearish sentiment on once-high technology stocks. Meanwhile, the tech-heavy Nasdaq Composite Index fell 1.30% during U.S. trading hours. The S&P 500 also fell 1.10%.

Edward Moya, senior market analyst at OANDA, said on the 19th that Bitcoin seems ready to continue trading as a risky asset and remains vulnerable to growing concerns about the Fed's aggressive tightening policy. U.S. Treasury (bond) yields may continue to soar this week, which may test some Bitcoin holders and altcoins. But Moya is optimistic about the rebound in Bitcoin prices. Moya said that the breakthrough in U.S. Treasury yields is not expected to happen so quickly, but when it ends, it may be a clear signal for many traders to scale back on cryptocurrencies.

The number of first-time unemployment claims in the United States soared to a three-month high last week, indicating that the impact of the COVID-19 pandemic on the job market has increased. Danske Bank said that if the US economy develops in line with expectations, the Federal Reserve may raise interest rates for the first time in March, supported by a tight labor market and still high inflation. Market analysts believe that as the pace of interest rate hikes gradually approaches, the rise in cryptocurrencies due to the central bank's monetary easing is losing momentum.

In addition, as traders bet that the Federal Reserve will raise interest rates sharply in March, the yield on the benchmark U.S. Treasury bond continues to approach the 2% mark. Since January, the 10-year U.S. Treasury bond has climbed 37 basis points to 1.88%, which is expected to be the fastest monthly increase since November 2016. Pacific Investment Management Company said that the yield on the 10-year U.S. Treasury bond has soared by more than 30 basis points since the beginning of this year and is now beginning to show its appeal. This also seems to confirm that some traders seem to be reducing the size of cryptocurrencies.

In fact, not only the crypto market, but also the U.S. stock market has shown a similar trend. Recently, Jeremy Grantham, a well-known investor who has been predicting market bubbles for decades, said that the stock market is entering the historic crash he predicted a year ago, and even the intervention of the Federal Reserve cannot prevent the final nearly 50% plunge. Some analysts worry that if there is a major correction in the stock market, no matter what the on-chain fundamentals suggest, this will pull down the price of BTC.

Despite the crypto market's slump, there are also continued bullish voices. Mike McGlone, senior commodity strategist at Bloomberg, believes that despite the recent weakness in the crypto market, both Bitcoin and Ethereum will surge in 2022. In a new analysis, McGlone said that both BTC and ETH have a solid foundation to build rebound momentum. He predicts that as Bitcoin moves towards $100,000 and Ethereum will also break through $5,000, both will continue to dominate cryptocurrencies in 2022. McGlone believes that Bitcoin is in a "consolidation bull market" and predicts that the Fed's new policy will actually benefit Bitcoin.