The FED and its decision of December 10 generate uncertainty in cryptocurrency markets.
According to Muvdi, bitcoin ETFs could intensify sales in a market in a risk off phase.
At a time of high cryptocurrency volatility, Daniel Muvdi, head of markets at Quantfury, explained in a recent interview the elements that are impacting the ecosystem and how bitcoin (BTC) may be anticipating a decline for risk markets.
For Muvdi, the cryptoasset market could be anticipating what is known as a period of risk off, that is, a phase in which investors avoid risky assets.
According to the analyst, there is a lot of uncertainty right now in the market and the risks are becoming more and more latent. To your judgmentthere is an excess of optimism about artificial intelligence, which is generating a bubble and which has created much of the bullish narrative:
«Seeing that fractures can occur, what is called risk off occurs. What we are seeing is that we could see an exit from risk. Now, what does this mean by bitcoin? In my opinion, bitcoin is acting as an early indicator of what this risk exit could be.
Muvdi stressed that “if the risk off occurs, that is, if we are going to get out of risk, I could look for bitcoin even at lower amounts.”
The FED and rate uncertainty
One of the factors that generates the most pressure in the market is the next meeting of the United States Federal Reserve (FED) scheduled for December 10, as reported by CriptoNoticias. Given this event, Muvdi points out that the expectation of a possible rate cut has changed recentlyincreasing uncertainty:
The FED had almost a guaranteed consensus that they were going to cut rates, but now 60% believe that it will not happen. Since a cut had been discounted for December 10 and it does not happen, that creates problems.
This change in expectations directly affects liquidity and selling pressure in cryptocurrencies, especially bitcoin. Another key point that Muvdi highlighted is the role of exchange-traded funds bitcoin ETF as sales catalysts in risk exit scenarios:
I commented in my studies that this is like a double-edged sword, because in a risk off scenario the ETFs will sell strongly. For example, in a single day a trillion dollars moved into IBIT, BlackRock’s ETF, and 3.5 trillion dollars have left ETFs. This generates a strong impact on sales to exchanges, increasing pressure on the market.
This phenomenon demonstrates how traditional investment instruments can amplify the volatility of crypto assets in times of uncertainty, according to the specialist. Muvdi also mentioned that External decisions, such as the repatriation of Japanese capital, could intensify pressure on risk assets.
Likewise, the analyst considered that, although bitcoin has characteristics that could make it a safe haven in the future, currently continues to behave like a high-risk asset:
I believe that it has not yet been a safe haven asset at any time, although it has all the potential to be one, due to the characteristics of its scarcity and other things that make it an excellent candidate. But right now it’s more experimental, in my opinion. People still need that adoption to achieve this balance that leads it to become a refuge as such.