The post Crypto Market Crash Might Get Worst In Coming Days – Here’s Why appeared first on Coinpedia Fintech News
The recent interest rate hikes by the Federal Reserve are having a negative impact on the cryptocurrency market, which could result in a potential shift in investor sentiment away from cryptocurrencies. According to recent news from Reuters and the Financial Times, the central bank plans to start a tougher rate hike path soon.
Many analysts predict that the impact of the interest rate hikes on cryptocurrencies like Bitcoin could be severe. The higher interest rates will make it more expensive to borrow money, which could lead to a decrease in investment and spending in the economy.
This, in turn, could lead to a decrease in demand for cryptocurrencies, leading to a further drop in their value. With reduced demand, cryptocurrency investors may start to shift their attention toward traditional assets, which may result in decreased liquidity in the crypto market.
Jerome Powell, the US Federal Reserve Chair, has faced criticism from some experts for the decision to increase interest rates. Some are concerned that the move could slow economic recovery, while others worry about its impact on the stock market and the housing sector.
Additionally, some critics argue that the move is premature, as inflation has not yet reached levels that require such action. Furthermore, the rise in interest rates could have a negative impact on emerging economies, as it could lead to an outflow of capital from these countries.
The Federal Reserve’s Interest Rate Hikes May Trigger a Significant Downturn in the Cryptocurrency Market
Nicholas Merten, the host of the YouTube channel DataDash and a well-known cryptocurrency analyst, has warned that the Federal Reserve’s recent decision to raise interest rates and reduce its bond-buying program could result in a significant downturn in the crypto market.
According to Merten, the Fed’s actions could lead to reduced liquidity, increased competition from traditional assets, negative sentiment towards cryptocurrencies, and uncertainty in the market. As a result, investors could be hesitant to invest in cryptocurrencies, leading to a drop in demand and prices.
Merten added that the Fed’s plan to raise interest rates again to combat inflation could do much more harm to the cryptocurrency business. He predicted that the Fed’s new liquidity traps, hinted at in recent testimony by Chairman Jerome Powell, will cause Bitcoin’s price to go below the $20,000 mark very soon.
Merten claims that the Fed has been intentionally fostering an atmosphere of unbridled optimism in order to funnel money from the actual economy into the more liquid financial markets. Such outcomes include a steep drop in cryptocurrency prices that could take a while to recover from.
Although Merten’s forecast has been met with skepticism from industry insiders, he nevertheless recommends that crypto investors be ready for a potential market catastrophe. He said that Bitcoin bulls should be pleased to pick up BTC between $13,000 and $14,000 if it goes that low, as the past weeks have shown how entwined crypto is with traditional markets.
Overall, investors need to keep a careful eye on the situation as it unfolds and take measures to reduce their exposure. Bitcoin is currently trading at $22,095, inside the $22,000 – $22,100 range it has been in for the past few days.