Fed Policies Trigger Sharp Bitcoin Drop

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by Giorgi Kostiuk

2 years ago

Bitcoin (BTC) experienced a significant decline of 8.8%, dropping to $95,000 last week, marking the steepest loss since August. This was influenced by Fed's rate expectations and negative messages surrounding Bitcoin.

How Fed Policies Impact Bitcoin

Andre Dragosch, Bitwise’s Director of European Research, assessed the recent drop in Bitcoin’s price, stating that the Fed's pressures on the economy negatively affect both risky assets and the broader markets. The cautious stance of the Fed, prompted by returning US inflation, has created a negative atmosphere in the cryptocurrency market. Rising yields on 10-year Treasury bonds are causing investors to avoid risk.

Inflation Fears from the 1970s Resurface

Experts suggest that the Fed's primary concern is the recurrence of inflationary waves from the 1970s. Dragosch mentioned that the Fed is hesitant to accelerate inflation through aggressive rate cuts, but delaying action could also lead to an economic slowdown.

Future of the Crypto Market: Experts' Views

Dragosch concluded that Bitcoin’s limited supply and financial tightening will support the cryptocurrency market in the long-term. The Fed may be forced to act under economic pressures, potentially creating significant buying opportunities for Bitcoin.

Changes in Fed policies have a significant impact on the cryptocurrency market. The effect on Bitcoin's price illustrates how critical macroeconomic factors are.

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