Bitcoin holds steady at $28K, as investors seek safety amidst Powell's hawkish stance, leading to another drop in the US stock market.

Yesterday, due to escalating market risk aversion and hawkish comments from Federal Reserve Chairman Powell, the US stock market experienced a widespread decline. However, Bitcoin has continued to hold above $28,000 this week, with a 6.74% increase in the past week. Denny Galindo, Managing Director at Morgan Stanley, believes that the crypto winter may be coming to an end.

Bitcoin Holding Steady at $28K, Is the Crypto Winter Coming to an End?

According to The Block's report, Morgan Stanley Managing Director Denny Galindo believes that the crypto winter may be coming to an end. Galindo's prediction is mainly based on the upcoming "halving" event, a unique feature of Bitcoin that reduces its supply and historically led to price increases. The investment banker analyzed several indicators from history that signal Bitcoin's bottom, including the time since the last peak, the extent of retracement, and miner capitulation. Based on these data, he suggests that Bitcoin's bottom may have already occurred.

Market Risk Aversion Persists

However, other analysts point out that the global economic downturn has led to reduced liquidity.

YouHodler Market Lead Ruslan Lienkha stated that in such circumstances, the crypto industry is unlikely to thrive. The spring for cryptocurrencies will only come after a soft landing in the United States. He also noted that the declining market value of stablecoins in recent months indicates that investors are withdrawing from the cryptocurrency market.

Lienkha added:

Bitcoin has been hovering in the range of $25k-31k for over 6 months; meanwhile, the market value of stablecoins has been gradually decreasing over the past few years. Therefore, we may conclude that while capital outflow from the cryptocurrency market is not critical, it is occurring.

Powell Turns Hawkish, U.S. Stocks Continue to Plunge

In fact, market risk aversion is not only seen in Bitcoin. With the Russia-Ukraine conflict ongoing for 20 months and recent Israel-Palestine clashes, global inflation remaining high, and interest rates staying elevated, market concerns persist.

Yesterday, Federal Reserve Chair Powell spoke at the New York Economic Club, mentioning that U.S. inflation remains too high and may require lower economic growth.

Although recent data shows progress in easing inflation, he also added that monetary policy has not yet become overly tight.

As Federal Reserve officials enter a blackout period next week, Powell's hawkish remarks greatly surprised the market, leading to continued plunges in U.S. stocks, while gold and oil maintain their upward momentum.