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The main cryptocurrencies have fallen this year, dragged down by risk aversion, the rise in interest rates and fears of a global recession, while detractors anticipate its end, technological entrepreneurs anticipate the changes that this market is experiencing.
At a time when more than 90 banks around the world embark on a day of historic increases in interest rates to curb global inflation, investors are suffering the consequences of the tightening of the most aggressive monetary policy in recent decades, leaving behind any encouragement to risk assets such as cryptocurrencies.
Only Bitcoin, the most famous crypto in the world, lost almost 60% of its value this year, and fell 70% of its value from the all-time highs it achieved in November of last year. A bearish trail followed by Ethereum, the second most famous, as well as other cryptocurrencies.
The Federal Reserve and other central banks continue to raise interest rates in hopes of bringing down soaring inflation, and more significant rate hikes have been promised in the near term. These types of measures seek to slow down economies on purpose, with the idea that the slowdown in household and business purchases will reduce inflationary pressures.
“Financial markets are fully absorbing the Fed’s strong message that it will not back down from the fight against inflation,” wrote Douglas Porter, chief economist at BMO Capital Markets.
For Argentinean Silvina Moschini, producer and panelist of ‘Unicorn Hunters’, the current “crypto winter” is very similar to what was experienced in the year 2000 with the internet bubble.
“I don’t think the floor has been reached and I don’t even remotely believe that the ceiling has been reached, neither with Bitcoin nor with the other currencies. We are going to expect many highs, many more lows and other rebound spikes because everything comes back, it is cyclical”, he added.
Cryptocurrency prices have plummeted in recent weeks because higher interest rates tend to hit investments that appear more expensive or riskier harder. Even gold fell as higher-yielding bonds make non-interest-paying investments look less compelling. While the US dollar strengthened a lot against other currencies.
with AP
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