• Over the weekend, crypto asset markets continued to slide.
• Wall Street responded with stock crashes after the Federal Reserve increased interest rates by half of a point last week.
• A drop in institutional interests could also be one reason behind recent bearish actions.

Over the weekend, crypto asset markets fell further and reached their lowest level this year. The market cap has dropped to $1.62 trillion, with crypto capitalization at its lowest point in 10 months.

The Federal Reserve increased interest rates by half-a-point last week. Wall Street then responded with a stock crash. In the seven days that followed, the crypto markets saw a 10% drop in value or about $200 billion.

Edward Moya (OANDA’s senior market analyst), stated that crypto markets have been shown to be in correlation with Nasdaq indexes. When he said that although the tech-focused Index is down 21%, it is still down by 22%.

One reason that recent price action has been so bearish is the drop in institutional interest. While 2021 was extremely bullish for institutional investment, the trend didn’t continue into 2022.

Names like Tesla (NASDAQ) and MicroStrategy entered crypto in 2021, driving momentum and purchasing pressure. However, 2022 has shown a more muted trend, as around four weeks have passed without any institutional outflows.

As investors seem to react to the wider economy, there seems to be more faith in traditional assets now that the Covid-19 panic is over.

The last thing to mention is that crypto markets can be cyclical. This means that everything will go up eventually must come down. Since Bitcoin began, there have been at least four bull markets. However, if history repeats itself, then the market could remain bearish through 2023.

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