Rampant inflation and the Federal Reserve’s approach to fighting it has apparently had a negative impact on the crypto market. The first sell-off trend started when the Feds announced a rate hike in July 2022. Although the Terra Luna crash made matters worse, the market was already on the verge of collapse.
Many people panicked and didn’t want to pay high interest rates on their crypto profits. Since then, the Feds have come up with many unfavorable decisions in the fight against inflation. Recently, on August 26th, Jerome Powel announced a stricter approach, leading to another downtrend in the crypto market and beyond.
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Many cryptocurrencies shed gains after the meeting until August 30, when some positive changes took place. These incidents have drawn the attention of top players in the crypto market, such as Bitfury CEO Brian Brooks.
The Fed’s approach affects short-term BTC traders more
In a recent interview with CNBC, Bitfury CEO Brian Brooks shared his thoughts on how the inflationary battle is affecting short-term BTC traders. He mainly pointed to the rate hikes since the start of the struggle. That federal agencies began aggressive approach to digital assets in early 2022. The rate hike affected borrowing as the financing mechanism became more expensive.
The rate hike gradually started at 0.25% in March 2022 and continued to increase until it reached 0.75% in July. The higher interest rates have a negative impact on short-term oriented traders as they have to pay high interest rates on their borrowed capital. According to Brooks, many traders now believe the Fed will remain hawkish in this fight given its approach and recent decisions.
Along with the Federal Reserve, Brooks also expressed disappointment with the SEC’s actions against the crypto market. The CEO believes that the regulator should inform crypto participants of rules that guide their actions.
The CEO believes the practice of suing people after they’ve carried out their plans is a completely wrong approach. He therefore recommended that regulators and Congress disclose early to participants what is and is not permitted.
Bitcoin price is currently trading below the $20,000 level. | Source: TradingView.com BTCUSD price chart
The Crypto Market and the Inflation War?
The ongoing rate hike has done a lot of damage to the crypto market. The first reaction was crypto inventory dumping, which led to a price crash. Then, after Terra collapsed, a long period of bearish trending dubbed “Crypto Winter” ensued.
As a result of this activity, the total crypto market cap plummeted from $3 trillion to $1 trillion. On August 29, the market cap lost $50 billion and fell below $1 trillion. Fortunately, crypto assets recovered slightly on August 30, pushing the number back to $1 trillion.
Cryptos like bitcoin and many altcoins have lost massively. persecution BTC price since November 2021, the coin has lost 65% from its all-time high of $69,000. Currently, the market is celebrating BTC at $20,000 since it fell below this level on Aug. 29.
Related Reading: Ethereum trading volume is the sluggish, ETH price struggles below $1,600
Analysts have predicted difficult months for BTC and ETH following historical trends and movements on the chart. But many hope that the current positive actions of August 30 will continue.
Featured image from pixabay and chart from TradingView.com
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