The Biden administration has warned traders that bitcoin, ethereum and other major cryptocurrencies have lost about $2 trillion in the combined crypto market this year.
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Bitcoin has fallen by 70% since the end of last year and has failed to exceed $20,000 while the price of Ethereum has plummeted following a dire warning from the head of the US Securities and Exchange Commission (SEC). Gary Gensler.
Now Bitcoin, Ethereum, and the cryptocurrency market are poised to take a hit that could send prices up from the Federal Reserve’s stubbornly high inflation rate (although some still hope it will bounce back) – and one analyst predicts the outcome could be worse. than expected. The Great Financial Crisis of 2008.
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More From Forbes Joe Biden Warns Bitcoin And Cryptocurrencies After Bamboro's $2 Trillion Valuation Crashes“We need to look at the macro picture and understand what is putting pressure on cryptocurrencies this year,” Mike Mugglen, chief commodities analyst at Bloomberg Intelligence, told Kitco.
Fed Chairman Jerome Powell launched a historic rate hike program this year as he battles inflation that has reached its highest level in 40 years.
Last week's August inflation report showed inflation rose more than expected, prompting the Fed to propose another significant rate hike at its meeting this week. The Fed's Federal Open Market Committee will announce its final decision on Wednesday, with markets predicting a 75 basis point hike in interest rates, pushing interest rates above 4%, a level not seen before 2008.
Bitcoin, Ethereum, other major cryptocurrencies and stock markets have fallen this year amid the Fed's mission to tighten monetary policy to siphon liquidity out of the system, fast-growing technology stocks and leading cryptocurrency markets.
“There has been renewed concern in financial markets that inflation could still be a formidable adversary to overcome,” Suzanne Streeter, senior investment and market analyst at Hargreaves Lanestown, said in an email.
“Cryptocurrency assets have always been closely linked to currencies, and as they are considered very risky assets, there has been a flight from the crypto wild west as investors look for less volatile places to put their money.
During the Covid-19 pandemic, the Fed and other central banks have been pumping liquidity into the financial system, causing inflation, and if the Fed's rate hike causes the market to crash and crash, McGlone fears it will no longer dry up. Dust.
“I think it will be worse than the 2008 correction, the Great Financial Crisis,” McGlone said. Federation It began to soften in 2007 and then increased liquidity.
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FORBES $10 Trillion More "One Domino Falls"However, McGlone predicted that the price of Bitcoin could rise to $100,000 by 2025 and remain bullish on Ethereum in the long term, highlighting the potential for institutional adoption.
At the moment, the price of Bitcoin has fallen below $20,000 in the last week and some fear that another crash may be coming.
FxPro Senior Market Analyst Kuptishkevich said: "Despite the sell-off, the balance of technical forces is rising again and there is a chance to return to the June lows and climb to $12,000-$14,000." he said in an email comment.