It was the Feds that caused the crypto market to crash. An announcement of raising interest rates brought panic to crypto investors. The Federal Reserve put the plan into effect, and crypto plunged.
Terra Luna USDT’s crash was another reason that crypto prices fell. It was the depegulation of an algorithmic stablecoin that led to huge losses and plunged crypto markets into infamy. The crypto market has been in an extremely prolonged crypto winter since then.
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Bitcoin and Ethereum, two of the most popular crypto currencies, lost huge gains and several projects were abandoned.
But the Summer Hasn’t Been Good Either
Analysts predicted a rally in price as market turmoil continues. These predictions are unfortunately delayed by the increasing volatility in crypto markets.
Bitcoin lost 37% in the last market downturn. The coin experienced a number of crashes in June 2022 that were unlike any other time. A slight increase of 17% was seen in July the next month. BTC pricesHowever, the rally was short-lived. It lost all its value and now trades below $20
Bitcoin plunged further on September 7, when it fell below $19K, but quickly recovered. Source: BTCUSD price chart from TradingView.com So what’s the way forward for the number one crypto?
An Analyst Identifies a Solution to BTC Recovery
Investors are waiting for Bitcoin to rally in price, but an analyst indicated that this occurrence is dependent on the Federal Reserve.
Dan Nathan, the RiskReversal Advisors principal stated this during the popular CNBC’s “Fast Money” episode. Nathan said that Bitcoin will only change to a bullish pattern if the Feds shift their approach to the inflation fight strategy.
Remember that Jerome H Powell gave a speech at the Federal Reserve Annual Meeting on August 26, 2022 that raised concerns among investors. The feds’ chair declared a more aggressive approach in the agency’s fight against inflation.
Neel Kazhkari had suggested before the meeting that they use the Vokcker Approach. The crypto community was worried because Kashkari initially seemed hesitant in his position. Powell sparked panic by announcing that the agency would be focusing its efforts on implementing new strategies. It is unlikely that the feds will change their approach.
It is an exaggeration to say these outplays affected crypto prices. Numerous coins began a decline trend on that date and they are continuing to do so until today. These pullbacks often outweigh the short-lived rallies.
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Bitcoin dominance is at its lowest point ever. Nathan said that Bitcoin trades like any stock. A rally for crypto’s number one coin may be impossible in 2022 as the Feds have not yet made a pivot.
Featured image by Pixabay, chart from TradingView.com