'Crypto Is Dead?' Analyst Says Doom Calls Are Overdone As Bitcoin, Ethereum, Dogecoin Hold It Together

Most major coins traded lower Thursday evening as the global cryptocurrency market cap declined 1.2% to $1.06 trillion at press time.

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Why It Matters: Risk assets were not aligned at press time, with Bitcoin and Ethereum treading red, while stock futures were in the green. S&P 500 and Nasdaq futures were up 0.2% and 0.3%, respectively, at press time.

Edward Moya, a senior market analyst with OANDA, said that while Bitcoin’s correlation with equities is still intact, the digital asset has underperformed for the past few sessions. 

“An increase with Fed rate hike expectations has capped how high Bitcoin can go for now, but as long as traders remain confident that the peak in Treasury yields remains in place, Bitcoin may have bottomed already,” wrote Moya in a note, seen by Benzinga. 

However, Moya is confident about cryptocurrencies as a whole. “Calls that crypto is dead have been overdone. In fact, crypto is alive and well.”

The analyst’s optimism was based on Coinbase Global Inc COIN announcing a partnership with BlackRock that would allow the latter’s investment management platform direct access to cryptocurrencies.

Meanwhile, yields on 10-year Treasury notes declined 5.3 basis points to 2.696% on Thursday. The gap between yields on the two-year and 10-year Treasury notes closed lower by 35.7 basis points to reach its lowest inversion since 2000, reported Reuters. Stocks have largely ignored this inversion, according to Moya.

Delphi Digital pointed out in a note that historical data shows that when the Fed Funds rate is above that of neutral interest rates, “recessions tend to occur.”

Neutrality on rates implies that any further rate hikes by the U.S. Federal Reserve will translate into restrictive action.

“Economic factors such as stock market cap-to-GDP, consumer sentiment with its relationship to unemployment, and declining GDP, implies the current market move is a bear market rally,” said the independent research boutique. 

Cryptocurrency trader Justin Bennett said that the total market cap could touch the $1.15 trillion mark should it reclaim $1.05 trillion levels.

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