First Mover Asia: Bitcoin Set to Close Week Underperforming Major Japan, China Stocks

Insights: Bitcoin has been underperforming major Asian stock indices amid investors' concerns about interest rate hikes and uncertain macroeconomic conditions.

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Bitcoin did a little better on Thursday after tumbling the previous day but still fell slightly, following a downward trend for much of the week. Ether fared slightly better, but other major altcoins were mixed.

Bitcoin, the largest crypto by market cap, was recently trading at about $43,500, about where it stood 24 hours earlier and well off the $47,000 threshold it crossed a week ago as investors continued to digest the U.S. central bank's new hawkish intensity and the ongoing swirl of economic events stemming increasingly from Russia's invasion of Ukraine.

"Bitcoin is struggling for direction as Wall Street grows cautious over how aggressive the [Federal Reserve] will be with tightening of monetary policy," Oanda Senior Market Analyst Americas Edward Moya wrote in an email.

SOL and AVAX were recently up about 2% and 3%, respectively after spending parts of Thursday in the red. Terra's luna (LUNA) was recently down over 4%. The meme coins DOGE and SHIB were both roughly flat. Outside the CoinDesk top 20, CAKE rose over 6% at one point.

Crypto prices veered slightly from the performance of major equity markets, which were in the green, albeit barely. The tech-focused Nasdaq was up less than a tenth of a percentage point.

The U.S. central bank has signaled powerfully as a body, and by individual governors, over the past week that it would ratchet up its efforts to tame inflation, which has reached nearly 8%, a four-decade high.

On Thursday, Federal Reserve Bank of St. Louis President James Bullard told reporters after a speech that the Fed would have "to move forthrightly in order to get the policy rate up to the right level to deal with inflation that we’ve got in front of us."

His remarks followed two days after Fed Governor Lael Brainard, who had been reluctant to abandon the Fed's dovish posture of recent years, suggested the Fed might increase interest rates at a faster pace.

Other winds during the day blew more favorably for digital assets. Addressing crypto In a speech for the first time, U.S. Treasury Secretary Janet Yellen said that a digital dollar could become a "trusted money comparable to physical cash."

Speaking to attendees at an American University event, Yellen highlighted the differing perceptions about crypto, saying that’s often the case with “transformative” technology. “Some proponents speak as if the technology is so radically and beneficially transformative that the government should step back completely and let innovation take its course,” she said. 

“On the other hand, skeptics see limited, if any, value in this technology and associated products and advocate that the government take a much more restrictive approach.”

Meanwhile, European and U.S. lawmakers who have criticized Russia's unprovoked attack on Ukraine were considering and pushing forward on new economic sanctions. 

They included a European Union ban on Russian coal and a U.S. House vote to remove Russia's favored trade status and a halt to imports of energy products.

"Bitcoin has held up nicely given the recent bond market sell-off, but it could struggle if that move continues," he said. "Bitcoin's long-term outlook remains bullish but if risk aversion runs wild it could be vulnerable to a drop towards the $38,000 level."

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