Bitcoin (BTC) $95,971.3Last week, it fell by 8.8 percent to 95 thousand dollars. This was recorded as the steepest loss since August. The Federal Reserve’s (Fed) limitation of interest rate cut expectations and negative messages regarding Bitcoin caused a decline in the overall cryptocurrency market. Experts warn that there may be further depreciation due to macroeconomic conditions.
How Do the Fed’s Policies Affect Bitcoin?
Bitwise Europe Research Director Andre Dragoschevaluated the recent decline in Bitcoin’s price. “The fact that the Fed is under economic pressure negatively affects both risky assets and the general markets,” Dragosch said. According to Truflation data, the re-acceleration of inflation rates in the USA caused the Fed to adopt a cautious stance. The Fed’s failure to lower interest rates more aggressively led to a negative atmosphere in the cryptocurrency market.
Dragosch, 10-year Treasury bond yieldsHe stated that the increase in prices led investors to avoid risk. “Rising bond yields and a strengthening dollar limit capital flows. “There is a possibility of further decline for Bitcoin in the short term,” he said. However, he underlined that Bitcoin’s limited supply creates strong support in the long term.
The Inflation Fear of the 1970s is on the Agenda Again
According to experts, the Fed’s biggest fear is the double crisis that occurred in the 1970s. inflation repetition of the wave. Dragosch said, “The Fed is afraid of accelerating inflation again with aggressive interest rate cuts. “However, waiting too long may also lead to an economic slowdown,” he said.
Dragosch believes that Bitcoin’s supply is limited in the long run and the effects of financial tightening cryptocurrency marketHe said he would support. “The Fed may eventually be forced to take action, unable to withstand economic pressures. “This could create a significant buying opportunity for Bitcoin,” he added.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that crypto currencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
