Bitcoin and Other Assets Expected to Hit New Lows in Coming Weeks
2022 has not started off well for most cryptocurrency traders. At the time of writing, bitcoin – the world’s number one digital currency by market cap – as well as many of its altcoin cousins are experiencing bearish activity that has seen them endure some of their biggest price drops in months.
Bitcoin and Other Assets Are Experiencing Heavy Dips
Bitcoin, for example, is presently trading for around $43,000 per unit. This is about $25,000 less than the all-time high it reached in mid-November. During that month, BTC was trading for a whopping $68,000, and it looked like the currency was on top of the world, but the hype only lasted for a short period.
Bitcoin is not alone in its present dilemma. At press time, Ethereum – the number two cryptocurrency in the world and the primary competitor to BTC – is down by roughly five percent and is trading for just over $3,400 per unit. Others, such as Solana, are down by around three percent.
These drops succeeded dips incurred by many stocks listed on the Dow, which allegedly hit a new record days before. The trend continues in that when things rise too fast, they can often come crashing down and take several passengers – or investors – with them. These stocks fell after it was revealed that the Fed held a meeting discussing the potential holdback of supportive monetary policies. In other words, the Fed would stop purchasing bonds, which means the U.S. economy may be in limbo for a little while.
In addition, the Fed also hinted that it would be looking to hike interest rates in the coming weeks. Vijay Ayyar – vice president of corporate development at international cryptocurrency exchange Luno – said in an interview:
Overall, I think the global markets have shown weakness in light of the recent Fed moves to raise interest rates. Hence, I do think the drop yesterday is quite correlated. We’ve seen U.S. markets fall yesterday and as a result, all other risk asset classes fared equally poorly including crypto. Specifically, regarding bitcoin and crypto, the last four weeks have seen some weak price action owing to a lack of interest/demand, the holiday season, and potentially similar factors.
This Followed Stock Dips
Aside from the U.S., stock prices for both European and Asian exchanges also saw massive dips. Things are bad enough that many analysts say bitcoin is likely to experience new lows during the first half of the new year. Yuya Hasegawa – a crypto market analyst at Japanese bitcoin exchange Bitbank – explained that he sees bitcoin hitting an even $40,000 per unit before any further growth can be experienced:
The downward pressure on the price is expected to continue until the market fully prices in the tighter-than-expected future monetary policy.
Billionaire investor Mike Novogratz also commented that he could see BTC falling as low as $38,000 in the coming weeks.
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