Kryptotopp believes that the further development of prices for the world’s two largest digital currencies is at the mercy of the US Federal Reserve’s interest rate decision on Wednesday.
Bitcoin continued to experience a sharp decline over the course of Monday.
Reportedly, $200 billion was dumped from the cryptocurrency markets over the weekend and into Monday morning, according to CNBC.
The value of the cryptocurrency dropped to around $23,500 just after 3pm. There is a decrease of more than 14 percent in the past 24 hours, and a decrease of about 25 percent in the past seven days, according to CoinMarketCap.
This is the lowest level since December 2020.
Unlike the stock market, cryptocurrencies can be traded around the clock every day of the year.
Meanwhile, the world’s second largest cryptocurrency, ether, was down 17 percent on Monday. At 3pm on Monday, ether was trading at $1,213.
The currency has not depreciated since January of last year.
“If Ethereum continues to bleed to $1,200, the outlook looks bleak for other currencies as well,” Trenchev told Bloomberg.
– Commissioner at the Central Bank
The drop is explained by Friday’s US inflation figures, which showed inflation in May was a surprisingly high 8.6 percent – the highest level in more than 40 years. Inflation figures sent Wall Street down sharply with the stock market closed on Friday, which spilled over into the cryptocurrency markets over the weekend.
“Cryptocurrencies remain at the mercy of the Federal Reserve (US Federal Reserve, editor’s note) and are locked on Nasdaq and other risky assets,” Anthony Trenchev, co-founder and managing partner of crypto firm Nexo, told Bloomberg.
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Lender stops withdrawal
The pullback in the cryptocurrency market also occurs after lender network Celsius announced on Monday that it was halting withdrawals and transfers between users on the platform, he writes. financial times.
°C indicates “severe market conditions”.
The lending platform gives users the opportunity to lend cryptocurrency so that it can be provided as collateral for other crypto projects, thus earning interest on the loan.
Interest in such high-risk projects slowed markedly after, among other things, the collapse of the Terra stack coin in mid-May, according to the Financial Times.
– Eliminate risks
The decline in the stock and cryptocurrency markets may be due to investors’ concern about how the latest inflation numbers will affect the US Federal Reserve, which will issue a new interest rate decision on Wednesday.
A majority expects Central Bank Governor Jerome Powell to raise interest rates by a new 0.5 percentage point, according to Chief Economist Marius Gunsholt Hof at Handelsbanken.
Some believe the central bank may raise it further, according to Reuters.
Bloomberg Talk to analyst Vetle Lunde at Arcane Research about why bitcoin can fluctuate so much when Wall Street is closed.
The institutional market is now focusing a lot on de-risking, with rising inflation and interest rates as key elements behind de-risking. Lundy says this has undoubtedly had a strong impact on Bitcoin Bloomberg.
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