The raging inflation and the Federal Reserve’s approach to fighting it have seemingly affected the crypto market negatively. When the Feds announced a July 2022 interest rate increase, it was the start of the first selling trend. The market was close to collapse, even though Terra Luna’s crash made matters worse.
Many people panicked and didn’t want to pay high interest on their crypto gains. The Feds made many bad decisions regarding the fight against inflation since then. Jerome Powel recently announced that he would be taking a more strict approach to the inflation fight on August 26th. This caused another dip in the crypto market, and many others.
Daily TA, August 30, 2022| Daily TA August 30, 2022
Many cryptocurrencies experienced price losses from August 30 until some positive changes were made. These events have drawn the attention of Bitfury CEO Brian Brooks.
Fed’s Approach Affects Short-Term BTC Traders More
Brian Brooks (CEO of Bitfury) shared his views on the impact of the inflation fight on BTC traders in a recent interview. His main point was the increase in interest rates since the fight began. He was right. FedsIn early 2022, the aggressive digital asset strategy was initiated. Because borrowing became more costly, the interest rate increase impacted borrowing.
Rates rose gradually starting at 0.25% in March 2022, and then continued to climb until reaching 0.75% by July 2022. Short-term traders are negatively affected by higher rates because they have to pay high interest rates for their borrowing capital. Brooks says that many traders believe the Feds will remain hawkish in this battle, given current policies and decisions.
Brooks expressed disappointment at the actions of the SEC against crypto markets, in addition to the Federal Reserve. Brooks believes the regulator should provide information to crypto investors about how they can guide their actions.
The CEO believes that the practice of suing people after they’ve executed their plans is a very wrong approach. He, therefore, recommended that regulators and congress disclose what’s allowed and what’s not to participants early.
What is the Inflation and Crypto Market Fight?
A lot of damage was done to the cryptocurrency market by the continued increase in interest rates. A price crash followed as the first reaction was to dump crypto holdings. Then after Terra collapsed, a long period of the bearish trend followed, tagged “Crypto Winter.”
These activities led to a drop in the total crypto market capitalization from $3 trillion down to $1 trillion. The market cap fell to $1 trillion below its original level on August 29th, after it lost $50 billion. Crypto assets showed some improvement on August 30 and the number has now risen to $1 trillion.
Bitcoin, and other cryptos like it have suffered huge losses. Tracing BTC pricesThe coin lost 65% since its $69K all-time peak in November 2021. The market celebrates BTC at $20K, since August 29, when it fell below this level.
Read Related Reading: Ethereum Trade Volume at Its Lowest, ETH Price Struggles below $1,600
Following historical movements and trends on the chart, analysts have forecast difficult months for BTC/ETH. However, many people are optimistic that the positive actions since August 30 will continue.
Featured Image from Pixabay, Chart from TradingView.com