The crypto market was in a shock because of the latest Bitcoin Ether Prices Fall Along With Tech Stocks. Read to know the reasons behind this recent fall of the currencies.
The price of bitcoin and ethereum, the world’s most popular cryptocurrencies, plunged to a low of $ 42,412 on the Bitstamp exchange. There is a daily decline of around 75 % and let’s understand the reason Bitcoin Ether Prices Fall Along With Tech Stocks.
Bitcoin Ethereum Prices Fall – Reasons
Bitcoin and cryptocurrency dip happened because of the culmination of various reasons.
The federal reserve interest rate hike is the major reason behind the dip. The federal reserve changed its monetary policy and the market is reacting accordingly. This resulted in the falling of bitcoin to around 5% and ethereum and the remaining crypto market saw losses from 6 % to even 10 %.
These losses coincide with similar but more moderate losses in the market as the Nasdaq fell by 3.3 %. So the stock market showing weakness along with the market slump is likely related to the inflationary concerns around the US Federal Reserves’ plan to raise the interest rates. As the federal rates shoot up, holding volatile investments that generate less income becomes less attractive compared with government bonds.
“It had been range bound and seemed to be waiting for a catalyst one way or another, and the hawkish Fed was the catalyst,” said Craig Erlam, senior market analyst at trading firm Oanda.
We could anticipate that the prices will fall again if the federal reserve could not meet its goals. The federal reserve wants to end the bond-buying program, a form of economic stimulus before it lifts short-term rates to curb inflation.
Heavy demand for goods, disrupted supply chains, and various shortages have pushed 12-month inflation to its highest reading in decades. Core consumer prices which exclude food and energy were up to a high of 4.7%. That is significantly above the federal government’s 2% target.
“This is proof that bitcoin acts like a risk asset,” said Noelle Acheson, head of market insights at crypto lender Genesis Global Trading. “The short-term holders, they are the ones who are trading and will be closest to the exit.
Again there was a bitcoin crash due to the internet shutdowns in Kazakhstan due to protests. This caused the bitcoins network to tumble 13.4 %. No timeline exists about the switching back on the internet in Kazakhstan, the world’s 2 nd biggest bitcoin mining country.
According to the data, the network hash rate has now fallen to 165 EH /s after peaking at 229 EH/s on the new year day. But it is a temporary thing and we can hope that things get back to normal soon.
Mark Newton, Managing director of Fundstrat Global Advisors noted that $ 45,655 was a significant level of support for Bitcoin. Now that it has been breached and the flagship cryptocurrency appears to be on track to drop below the $40,000 level for the first time since September 2021.
Way forward in the Cryptomarket
Cryptocurrencies, like other speculative assets such as tech stocks, have performed well over the past two years in an environment of superlow interest rates.
The federal government not meeting its goals is going to influence bitcoin very much in the future. But there is still a chance that bitcoin will recover and go back to 46k. If bitcoin continues to plummet though, it could be an indication of the bear market beginning.
Cryptocurrencies, without centralized authority, remains the most speculative currencies in the market and will be volatile enough according to even small changes or rumors in the market
