💥Cryptocurrencies fall, ETH near capitulation

Today's capitulation of the bulls on the financial markets also transferred pessimism to the cryptocurrencies, which recorded significant declines. Today's scale of the sell-off is mainly due to the disastrous macro data coming from the US economy and yesterday's ECB announcements. As a reminder, today's US CPI inflation reading of 8.6% may signal the Federal Reserve for aggressive rate hikes. 

• The consumer sentiment index compiled by the University of Michigan hit historic lows. Inflation reading above expectations indicates that the Federal Reserve will likely continue to tighten the screw on equity markets

• Bitcoin has clearly correlated with equity markets in recent months by, among other things, the involvement of mutual funds with exposure to both markets at the same time, which have to manage risk and capital accordingly. Nevertheless, cryptocurrencies still remain a literally microscopic market compared to the capitalization of the entire S&P500 index, NASDAQ or all US listed companies, which makes it the price of Bitcoin that reacts to the volatility of the indices - not the other way around;

• Today, some of the call options on Bitcoin that were eagerly taken out by bulls in the face of the dynamic rebound from the $24,000 levels to close to $32,000 have expired, making volatility still decidedly elevated. If options were to be retained, traders would be forced to pay a premium to hold the option, which is definitely not encouraged by Bitcoin's price reaction;

• Altcoins are performing exceptionally poorly against Bitcoin, which should come as no surprise as it has been characteristic of the cryptocurrency market in each of the previous besses. Major rival Ethereum is also performing poorly, having slipped below key levels;

ETHEREUM chart, D1 interval. The second most important cryptocurrency is struggling to hold an important support that has been repeatedly tested in recent years. A fall below $1,600 could end in a downward wave fueled by the liquidation of leveraged positions and defensive orders. Source: xStation 5