The prices of several cryptocurrencies have dropped today, as the winter of cryptocurrencies continues in what have been very difficult market conditions this year.
Most cryptocurrencies fell today, including the largest cryptocurrency in the world, Bitcoin, which saw a drop of around 3%. At the time of writing, the Bitcoin price was around $ 20.117.
Like stocks last week, cryptocurrencies seemed to be picking up, but most experts don't believe the cryptocurrency market sales are over yet, and even trading never seems to stop on. Bitcoin system.
"Although we have seen a recent rally in bitcoin and ethereum after hitting lows of around $ 17.500 and $ 880 respectively, we are still not convinced that we have hit a low," said Richard Usher of cryptocurrency firm BCB Group, according to reports. from the NextAdvisor website, a subsidiary of Time. "The overall risk environment remains on the razor's edge and while we think risk assets will recover significantly towards the end of the year, we see risks are leaning towards further sell-off."
Prices and interest in cryptocurrencies have struggled as have growth and tech stocks, largely due to the Federal Reserve's monetary policy moves. In an effort to combat extremely high levels of inflation, the Fed has raised its overnight lending benchmark rate, the federal funds rate, very quickly this year and more rate hikes are likely to come. Rising interest rates make riskier assets less attractive because it increases the returns on safer assets and usually puts pressure on earnings.
Are institutions abandoning crypto?
Since cryptocurrencies do not generate profits and are extremely difficult to value, especially when you think of highly speculative tokens like Shiba Inu and Dogecoin, in my opinion the uncertainty is more negative for many cryptocurrencies. Additionally, the Fed has begun shrinking its balance sheet by nearly $ 9.000 trillion in a process known as quantitative tightening, which essentially drains liquidity from the economy. This could have a dampening effect on the funds that previously flowed into the cryptocurrency market.
Another possible reason for the drop in Shiba Inu and Dogecoin is that popular cryptocurrency website Crypto.com said earlier this week that it removed 15 cryptocurrencies, including Shiba Inu and Dogecoin, from its Crypto Earn program. The initiative allows cryptocurrency investors to earn interest on their cryptocurrency holdings.
What will happen now?
Unfortunately, until the uncertainty surrounding inflation, rate hikes and quantitative tightening clears up, I believe it will be difficult for the cryptocurrency market to take a sustained run.
Although Shiba Inu and Dogecoin are now firmly embedded in the cryptocurrency market, I have never seen them as noteworthy investments, because the two have no special use in the real world or any technical advantage that makes them superior to other blockchain networks.
Cardano is definitely worth a look. The network is already capable of processing 250 transactions per second and aims to be able to potentially process millions of transactions per second in the future after system updates have been made.