Macro turn keeps pressure on crypto assets

NEW YORK, NEW YORK, US, May 2, 2022 /EINPresswire.com/ -- ALT 5 Sigma Inc. a global fintech that provides next generation blockchain powered technologies for tokenization, trading, clearing, settlement, payment, and insured custodianship of digital instruments releases its Digital Assets Morning Call.

• Little reprieve thus far from April’s sharp selloff

• Global growth concerns increasing with China again in the spotlight

• New York state wants crypto companies to use blockchain technology in compliance efforts

The steep selloff in US equities last week highlights the still-difficult investment climate for many financial assets, including crypto assets, resulting from the anticipated withdrawal of central bank liquidity, slowing global economic growth and high inflation.

April’s selloff in crypto and risk assets leaves a mark

Those themes and drivers look to remain front and center this week alongside the Federal Reserve’s policy meeting as well as those from a string of other central banks. That said, the scope of the market movements last month suggests that at least some of the more challenging investment backdrop is better factored into prices. In April, the Nasdaq fell 13.2%, S&P 500 fell 8.8%, bitcoin fell 16.2% and ether fell 15.4%. That certainly does not preclude the potential for further declines, but it opens scope for some corrective gains in the event that the news/data flow improves.

On the charts

Bitcoin made a marginal new low for the month-long selloff over the weekend at $37,426 and is testing support at the cluster of lows from late-February and March between $37,028 and $37,582. A sustained break of that support would open scope to the $35,000 area.

Ether has now retraced about three-quarters of its March-April rally and has held under its 100-day moving average for three consecutive sessions, which now represents resistance at $2,904. That resistance area is reinforced by the downtrend drawn off the April 4 high which currently comes in at $2,919.

China’s covid wave may not be subsiding yet

Following last week’s surprisingly weak reading on US first quarter GDP (-1.4%), concerns about global growth have intensified. In China, authorities have begun to impose incremental covid restrictions in Beijing. To date, Beijing has been spared of the covid-related lockdowns imposed on Shanghai and other areas of the country. But if covid infections spread more widely and lockdowns were imposed on the nation’s capital, it would intensify concerns about China’s economic growth prospects.

Latest China economic data highlight downside risks to regional and global growth

China’s Purchasing Manager’s Indexes released over the weekend showed a concerning drop in the services sector, which plunged to 41.9 in April from 48.4 in March, much worse than expected and clearly impacted by covid restrictions. The Manufacturing PMI fell to 47.4 from 49.5, close to expected but still weak overall and leaving the indexes well below the 50% growth/contraction level.

The PMI’s are used as a proxy for future growth, and these readings suggest downside risks to the economy. Importantly for financial markets, including crypto investors, China is the world’s second largest economy and its performance absolutely has knock-on effects for global growth.

Regulatory news

The New York state Department of Financial Services (DFS) said that crypto currency firms should use blockchain analytics to manage financial risk and ensure compliance with AML and KYC regulations. Use of blockchain analytics could enhance oversight reporting in several ways, including improving real time tracking of the movement of funds, as well as tracing the “transaction lineage” in peer-to-peer transactions that take place outside of those conducted with non-custodial wallets. Note that NYS DFS regulations carry an outsized impact nationally given the high concentration of financial firms located in New York state.

Robert Lynch
Head of Research and Strategy
ALT 5 Sigma Inc.
bob@alt5sigma.com

ABOUT ALT 5 Sigma

ALT 5 Sigma is a global fintech that provides next generation blockchain powered technologies for the trading, clearing, settlement, payment, and insured custodianship of digital instruments. ALT 5 was founded by financial industry specialists out of the necessity to provide the digital asset economy with security, accessibility, transparency, and compliance. ALT 5 provides its clients the ability to buy, sell and hold digital assets in a safe and secure environment deployed with the best practices of the financial industry. ALT 5 Sigma's products and services are available to Banks, Broker Dealers, Funds, Family Offices, Professional Traders, Retail Traders, Digital Asset Exchanges, Digital Asset Brokers, Blockchain Developers, and Financial Information Providers. ALT 5's digital asset custodian services are secured by Fireblocks.

DISCLAIMER:
Digital Asset Morning Call is for informational purposes only and does not constitute, either explicitly or implicitly, any provision of services or products by ALT 5 Sigma ("ALT 5"). Investors should determine for themselves whether a particular service or product is suitable for their investment needs or should seek such professional advice for their particular situation. ALT 5 Sigma. makes no representation or warranty to any investor regarding the legality of any investment, the income or tax consequences, or the suitability of an investment for such investor. ALT 5 Sigma does not solicit or provide any financial advice. This is at the sole discretion of the individual.

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