Bitcoin and Hang Seng Index both stalled – market-wide risk aversion looming? | coindesk JAPAN | Coindesk Japan

Bitcoin’s (BTC) rally that started a month ago seems to have hit a wall this week, ending its momentum near a key resistance line. And a similar pattern emerged in the Hang Seng Index, the benchmark for the Hong Kong market.

As a result, some observers believe there may be a resurgence of risk aversion across financial markets.

“The failure of BTC and Hansen is a technical sign that the calm atmosphere of early 2022 may not last all year,” said trader and president of Spectra Markets Brent Donnelly. ) said in a memo sent to customers late on the night of January 30.

Donnelly’s remarks point to Bitcoin’s growing reputation as a leading indicator of risk sentiment among seasoned traders. In the past, the world’s largest cryptocurrency has led major tops and bottoms in the S&P 500 by weeks.

Bitcoin’s drop at key resistance may be a pre-warning of impending broader market risk aversion. (CoinDesk/TradingView)

Bitcoin fell nearly 4% on Jan. 30, turning down from $24,000. We saw a similar bull market stall above $24,000 last August.

The Hang Seng Index has also turned downward from resistance that can be traced back to June 2022.

“The Bitcoin chart is a bit like the Hang Seng Index chart,” Donnelly wrote in his note. “BTC is at $24,000, just below the $25,100/$25,400 pivot, which is another reason to be wary of risky assets.”

Stocks, bonds and crypto assets have surged in recent weeks, while the US dollar has fallen on hopes that the Federal Reserve will pause rate hikes in May and cut rates later this year.

The Fed is likely to raise the base rate by 0.25% on Feb. 2 to a new range of 4.5% to 4.75%. Analysts expect Fed Chairman Jerome Powell to push back against market expectations of a rate cut at a news conference after the decision to raise rates, putting downward pressure on risk assets.

Donnelly believes there are some uncertainties ahead that could dampen risk appetite.

“With so many scenarios this year (no landing, soft landing, recession light, hard landing, crash landing), it is not very likely that the market will get the right answer in the first few weeks of 2023. I don’t think 2022 was a clear one-way scenario (Fed tightening), but 2023 is much less clear,” Donnelly said.

｜Translation: coindesk JAPAN
｜Editing: Toshihiko Inoue
| Image: CoinDesk/TradingView
｜Original: Bitcoin and Hang Seng’s Stalled Rally Might Mean Wider De-Risking Ahead, TradFi Firm Says