Bitcoin Still Struggles Amid The Fed’s Hawkish Move

Bitcoin Still Struggles Amid The Fed's Hawkish Move – Bitcoin Still Struggles Amid The Fed’s Hawkish Move

Bitcoin performed slightly better on Friday (8/4/2022) after falling the previous day although still slightly lower, following a downward trend for most of the week.

Ethereum has also fared slightly better, but other major altcoins are showing mixed price movements.

Bitcoin, the largest cryptocurrency by market cap, was recently trading at around USD 43,500 or around Rp. 625.9 million about 24 hours earlier. The figure is well short of the USD 47,000 threshold it crossed a week ago.

The decline came as investors continued to digest the US central bank’s renewed hawkish intensity and the ongoing vortex and economic events stemming from Russia’s invasion of Ukraine.

Oanda Americas Senior Market Analyst Edward Moya said Bitcoin is still struggling amidst the steps taken by the Fed.

“Bitcoin is struggling for direction as Wall Street is becoming increasingly wary of how aggressive the Federal Reserve is with tightening monetary policy,” Moya said as quoted by CoinDesk, Friday (8/4/2022).

Terra luna (LUNA) was recently down more than 4 percent. While the DOGE and SHIB meme coins were both flat on Friday’s trading.

After being side by side with the stock market, crypto prices are now slightly deviating from the performance of the major stock markets, which are in the green zone, although not entirely green. The tech-focused Nasdaq was up less than a tenth of a percentage point.

The US central bank has signaled strongly as a body, and by individual governors, over the past week it will step up its efforts to tame inflation, which has reached nearly 8 percent, a four-decade high.

On Thursday local time, the President of the Federal Reserve Bank of St. Louis James Bullard told reporters after his speech the Fed should move frankly to raise the policy rate to the right level to deal with inflation.

Fresh Wind

Bitcoin Still Struggles Amid The Fed's Hawkish Move

On the other hand, there is some fresh air for the advancement of digital assets, with US Treasury Secretary Janet Yellen saying digital dollars can be trusted as comparable to physical cash.

Meanwhile, European and US lawmakers who criticized the Russian attack are considering and pushing for new economic sanctions.

They include an EU ban on Russian coal and a US House vote to remove Russia’s favored trade status and a halt to imports of energy products.

Despite being stung by some of these negative sentiments, Moya said he was optimistic about Bitcoin’s performance in the short term.

“Bitcoin has held up well given the recent bond market sell-off, but could struggle if that move continues,” he said.

“Bitcoin’s long-term outlook remains bullish but if risk aversion goes wild, it could be vulnerable to a slide towards the USD 38,000 level.”

Weak Crypto Market, Apparently This Is The Cause

Bitcoin Still Struggles Amid The Fed's Hawkish Move

Previously, the crypto market weakened again due to macroeconomic turmoil stemming from the Russia-Ukraine conflict plus new evidence of the transformation of the US central bank which is taking more hawkish economic decisions at this time.

Bitcoin (BTC) was recently trading below USD 44,000 or around IDR 632.5 million, where it fell the previous day less than a week after soaring more than USD 47,000. The largest cryptocurrency by market cap is down nearly 5 percent.

Ethereum (ETH), the second-largest cryptocurrency by market cap, also fell more than Bitcoin by 7 percent and is trading just above $3,200.

All the top major altcoins by market cap have had even worse luck. Solana (SOL) is down more than 10 percent. Cardano and Polkadot each fell about 8 percent at some point. The DOGE and SHIB meme coins are also down about 12 and 9 percent, respectively.

The decline followed the release of the minutes from the Fed’s March meeting where governors discussed raising interest rates with a half-point hike.

Fed Chair Jerome Powell last week discussed the possibility of a half-point hike as a way to curb inflation, which is nearly 8 percent already at a four-decade high and potentially rising as the conflict in Ukraine rages on.

The US and other countries that have criticized Russia’s aggression are taking steps to impose full sanctions on Russia’s biggest financial services firms, including Sberbank.

The countries previously imposed only partial sanctions on the companies. However, Sberbank, which holds about a third of Russia’s assets, will now have no contact with the US banking system as a result of the full sanctions.

The sanctions are meant to cripple the Russian economy, which has been able to make debt payments from the income it receives from energy sales and through limited access to foreign banking.

Pressure on Bitcoin Price

The US has urged EU countries to ban imports of Russian oil and gas, which they depend heavily.

Co-founder and partner of financial services firm JST Capital, Scott Freeman said the global unrest and the current economic situation have hurt Bitcoin’s price.

“It’s hard to know where Bitcoin is moving right now. Ultimately, we believe there is a macro business theme in an environment where people don’t want to take risks today. People are looking for opportunities to sell and make a profit,” said Freeman as quoted from CoinDesk, Thursday, April 7, 2022.

“We think that, in the long term, Bitcoin and crypto are a really good place to put some percentage of your portfolio,” he concluded.


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