Friday, January 07, 2022
Bitcoin is losing heavily
Cryptocurrencies are rushing into the depths
The start of the year is unpleasant for Bitcoin, so far it has been down ten percent. The reason: It looks like the US Federal Reserve will curb the money glut more resolutely than previously expected.
Things are still going downhill for cryptocurrencies. Bitcoin, the largest and oldest cyber currency, has lost up to five percent to $ 40,959, its lowest level in more than three months. In November, the price had reached around 69,000 dollars, since then it has been almost 40 percent in the basement. The second largest cryptocurrency, ether, fell by almost nine percent to $ 3,129, its lowest level since the end of September. Sharp price fluctuations are not the exception with cryptos, but the rule.
Since the beginning of the year, Bitcoin and Ethereum have fallen by around ten and 14 percent respectively. “Bitcoin slept its way into 2022,” says Craig Erlam of brokerage house Oanda. The reason for the exchange rate losses: The US Federal Reserve has signaled that it will tighten monetary policy more quickly and more clearly than previously assumed. The minutes of the latest interest rate meeting show that the Fed members see the inflation trend as higher and more stubborn than previously assumed.
For risky assets like Bitcoin, that’s not good news. The cryptocurrency had gained around 60 percent in the past year, clearly outperforming other asset classes. The speculation was fueled by the extremely loose monetary policy of the most important central banks and the great willingness of many investors to take risks.
But when central banks begin to end the liquidity glut, it will also become more difficult for Bitcoin. To put it simply: Many people will then probably lack the play money to gamble with crypto currencies.
In addition, when the stock market is weak, cryptos also lose significantly in value. “Cryptocurrencies have profited from the massive cash injections from the Fed,” says Maley, chief strategist at Miller Tabak + Co, the financial portal “Bloomberg”. That pushed these systems too fast and too high.