Crypto market crises are just the tip of the iceberg. But when they touch the transmitters of stablecoins, institutional investors, individuals and major cryptocurrency exchanges, it’s total panic. Recently, analysts have argued that the recently regained semblance of a recovery has lost its appeal. Because we have again entered a new crisis.
Fall of the cryptocurrency market, and again!
We will remember this for a long time bear market which has affected so many players in the crypto ecosystem. Penalized by the leverage effect, both bitcoin and ether have fallen to minus 70% of their value at the end of 2021. Result: the sector has seen its size drop to $1 billion. Whereas it was 3 billion dollars before this crisis.
However, there was hope when major cryptocurrencies posted a rally recently. Bitcoin, still in first place in CoinGecko’s rankings by market capitalization, was no longer trading at $19,000. The floor price of $23,000 has been reached.
But it was only a mirage, it seems. At the time of writing this article, CoinGecko shows a price of $21,445.97, with a decline of 9%. Ethereum also followed it in this downtrend.
In the past 24 hours, the market has liquidated the equivalent of $550 million in cryptocurrencies. Its overall capitalization was down to just $1.09 trillion, down 7%.
What are the reasons ?
Undoubtedly the announcement of further interest rate hikes by the FED against a background of inflation! To say that the revision of these same rates last June allowed bitcoin to reach the 22,520 dollar mark again, momentarily. A meeting of the Federal Open Market Committee (FOMC) accompanied this decision.
Recently, FOMC members agreed to raise again interest rates. This is in order to control inflation. This time around, there will be no inflation rate subsidy due to lack of evidence on mitigating “ inflationary pressures “.
Here is an excerpt from the FOMC report:
” Members agreed that, in assessing the appropriate monetary policy stance, they would continue to monitor the implications of incoming information for the economic outlook and stand ready to adjust the monetary policy stance; if necessary, if risks that could hinder the achievement of the Committee’s objectives emerge. »
Hence this panic situation that the crypto market is currently experiencing. But we must not forget that this remains temporary. Indeed, in June, a correction had taken place and that had put an end to investors’ nightmares.
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