The fall in cryptocurrency prices is linked to the decision of the Federal Reserve to withdraw stimulus funds from the market.
Unexpected from earlier predictions, the cryptocurrency market saw a major price crash, comparable to 2021, with Bitcoin and Ether at the top of the losers list.
Earlier this year, bitcoin forecasts pushed the path to $ 100,000, prompting excitement among many investors. However, after the worst possible start to the year, BTC has now fallen by about 16.7% in the past week and the loss looks bigger. After a $ 68,000 peak in November, the price of bitcoin is now below $ 36,000.
Similarly, the Ether has reached about 20% and is now $ 2,500, and many meme currencies face the same fate. The overall decline resulted in the loss of over $ 1 trillion across the entire cryptocurrency market.
The US Federal Reserve is responsible for the crisis
The decline in the market price of these currencies is largely due to the decision of the Federal Reserve to withdraw stimulus funds from the market. Fed Chairman Jerome Powell last week announced aggressive measures to combat rising inflation. The Fed announced its decision to speed up bond repurchases and raise interest rates.
Interestingly enough, cryptocurrency prices responded the same as stocks. This is even more important as bitcoin advocates use it as a way to hedge against inflation. Stéphane Ouellette, Managing Director and Co-Founder of FRNT Financial, said: “ Crypto is responding to the same kind of dynamics that are weighing on dangerous assets around the world. »
The price crash may not be over
Bitcoin is already back to where it was around this time in 2021. However, some experts suggest that the layout may not be over.
With increasing regulatory crackdown on cryptocurrencies, the price slippage is expected to continue. Later, Russia has proposed a ban on cryptocurrency mining in the country. The proposal states that digital currency is “ risk to the country’s financial stability and the sovereignty of its monetary policy.”