Bitcoin, ethereum and cryptocurrency prices rebounded this week after a precipitous drop that wiped out $2 trillion from the combined cryptocurrency market.
Bitcoin price dipped below the key $20,000 per bitcoin threshold over the weekend (which some influential traders feared) before surging higher. Ethereum has fallen below $1,000 per ether for the first time since January 2021 as the network prepares for a controversial upgrade.
Now, after the Federal Reserve stunned markets with the biggest interest rate hike since the 1990s, billionaire chief executive of cryptocurrency exchange FTX Sam Bankman-Fried has blamed the Fed for the collapse in bitcoin and cryptocurrency prices and warned that people are “scared” ahead of Fed Chairman Jerome Powell’s highly anticipated testimony on Wednesday.
Federal Reserve Chairman Jerome Powell this month announced the biggest interest rate hike since…. [+] 1994, causing the price of bitcoin, ethereum, and the broader crypto market to crash.
“Literally, the markets are scared,” Bankman-Fried, often known simply as SBF, told NPR this week. “People who have money are afraid”.
Bitcoin and cryptocurrency prices have crashed along with stock markets in recent months, with the S&P 500 falling into a bear market last week, dragged down by tech companies that had soared to the time of the pandemic.
“The main driver of this has been the Fed,” the SBF said, adding that Mr. Powell is “caught between a rock and a hard place” as he strives to bring down runaway inflation that is s accelerated to 8.6% in May, a 40-year high.
On Wednesday, Powell will speak before the Senate Banking Committee for the first of two days of semiannual monetary policy testimony, during which he is expected to outline how far and how fast the Fed could go to fight inflation. while trying not to trigger a recession.
“The commitment [de la Fed] to restore price stability – which is necessary to maintain a strong labor market – is unconditional,” the Fed wrote in its semi-annual monetary policy report to Congress last week.
After the Fed raised its benchmark interest rate by 75 basis points for the first time in nearly three decades last week, new economic projections have revealed that policymakers expect interest rates to interest will reach 3.4% by the end of 2022, their highest level since 2008.
The price of bitcoin has jumped 5% in the past 24 hours, crossing back above the much-watched threshold of … [+] $20,000 per bitcoin and helping ethereum and coins recover.
The mood among cryptocurrency market watchers is gloomy despite bitcoin price rebounding this week.
“The bear market is likely to continue until we hear the first hints from the Fed of a halt to aggressive policy tightening,” FxPro senior market analyst Alex Kuptsikevich said by email.
“What should be noted is that important options expiries are coming in the next few days, so volatility can be expected, but the macro trend is likely to remain bearish until we saw the Fed changing or at least softening its position at the meeting of the Federal Open Market Committee [fixation des taux] of July,” Joe DiPasquale, the managing director of bitcoin and cryptocurrency hedge fund BitBull Capital, wrote in emailed comments.