The latest Federal Reserve announcement promoted fear among Investors. Bitcoin and Ethereum have wiped out their recent gains, while the general cryptocurrency market has taken a real bloodbath.
The Bitcoin price erased recent gains with the latest Fed announcement
Historically, Bitcoin has acted as a hedge against inflation; however, the asset traded like a stock in response to Federal Reserve monetary policy changes.
When the central bank raises interest rates, the price of Bitcoin generally gives up its earnings. Although the Federal Reserve left interest rates unchanged at the last meeting, the central bank revealed plans to introduce a hike in March.
After the two-day meeting, the Fed released a statement that reads:
“With inflation well above 2% and a strong job market, the Committee expects it will soon be appropriate to increase the range of targets for the federal funds rate.
The prospect of the central bank tightening monetary policy has induced fear among investors, triggering a bloodbath in cryptocurrency markets. "
Mike Novogratz, CEO of Galaxy Investment Partners, was quoted as saying that:
“Much of the beating has happened. It will be a difficult year for assets. … We are going through a paradigm shift ”.
A reversal trend in sight? Yes, according to our analysts!
Experts have argued that a rise in interest rates could lead to a complete reversal of Bitcoin and Ethereum earnings from 2021, to the extent that traders holding stablecoins in their wallets would be better off.
High interest rates push capital away from speculative and volatile markets and into government bonds. Analysts argued that the capital shift may already have been priced.
@inmortalcrypto, a pseudonymous cryptocurrency analyst, predicted that the asset could collapse further if the price of Bitcoin drops below $ 35.000.
Our analysts evaluated the Bitcoin price trend and noticed a reversal candle. Analysts believe the Bitcoin price could point to $ 48.000.