Bitcoin rose 5% on Thursday to trade at $19,427. Even though it had increased 2%, the global crypto market capitalization still fell short of 1 trillion dollars as Bitcoin’s price remained high with other cryptocurrencies like Ether also increasing in value by over 4%.
The likelihood for a severe global recession is now exponentially higher due Russia’s latest invade on Ukraine which has caused many countries around world such us Japan and South Korea that are major consumers/investors into cryptocurrency markets have started preparing themselves financially because they know there will be less demand coming out if this war continues unprovoked.
Why 2022 Crypto Prices Kept Fluctuating
Bitcoin investors have been experiencing a difficult year, with many portfolios now net losers due to this fall in the cryptocurrency market. However there is some relief coming as more traders lose faith and enter into trading spreads on safer assets like Ethereum (ETH).
Years of historical data show that drawdowns from 55% – 85% are normal following parabolic bull runs but because these events tend not to happen all at once it’s easier for them than others who must wait until their investments mature before getting rid off any fees.
Due to this year’s market crash, the majority of profitable portfolios are now net losers, and new investors may be losing faith in Bitcoin (BTC).
Investors are aware that cryptocurrencies are more volatile than the average asset class, but this year’s decline has been particularly severe. After reaching a record-breaking high of $69,400, the price of bitcoin plummeted over the following 11 months to an unexpected yearly low of $17,600.
That represents a value decline of nearly 75%.
The largest alternative currency by market capitalization, Ether (ETH), also experienced an 82% correction as its price fell from $4,800 to $900 in just seven months.
Years of historical data show that drawdowns in the 55%–85% range are typical following parabolic bull market rallies, but there are different factors influencing cryptocurrency prices today than there were in the past.
Investor sentiment is still low right now as people stay away from risk and wait to see if the Federal Reserve’s current monetary policy will help the United States’ persistently high inflation.
Fed Chair Jerome Powell announced a 0.75% interest rate increase on September 21 and hinted that additional increases of a similar magnitude would follow until inflation approaches the central bank’s 2% target.
Rest of 2022 Through 2023 Expectations
The Federal Reserve’s ability to raise, pause or lower interest rates will continue influencing prices of Bitcoin (BTC), Ethereum(ETH) and other cryptocurrencies.
This is because factors behind falling values in cryptocurrency markets are driven by policies that influence their economic health – mainly US inflationary expectations which have been subdued so far following President Joe Biden’s executive order from March 9 on Responsible Development Of Digital Assets .
Investors may want wait until there emerge clearer signs before buying these assets based off an understanding about whether Peak In Terms Of Demand For Risk Was Recently Experienced
The recent White House crypto directive is a positive step because it demonstrates regulators’ willingness to give the industry much needed regulatory clarity.
The framework outlined actions that can be taken by Biden’s administration and Congress, including;
- Amending Bank Secrecy Act (BSA) sectionchelle teachings on financial crime prevention;
- Keeping an eye out for transactions involving cryptocurrencies or other digital currencies such as ransomware payments made in bitcoin ;
- Exposing any illicit actors trying their luck while utilizing these.
Cryptocurrencies are moving increasingly towards mainstream status as more people invest in them. Even though crypto markets have been volatile lately, some coins like Bitcoin or Ethereum’s cousin Ether (the second most valuable) seem to be gaining traction with investors who want exposure to new technology without taking on any of its risks themselves-a cautiously optimistic outlook for an industry often prone toward headquarters rains over fears that these objects may never become worthwhile again!
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