Bitcoin is priced at $ 38,423 on Wednesday morning after hovering that level for almost a day. According to CoinMarketCap, it has lost 1.2% in the last 24 hours. The world’s largest cryptocurrencies have been looking for directions for the past few days, but the prices of other major cryptocurrencies have been mixed.
On Wednesday morning, Ethereum prices were basically flat at $ 2,777. The second-largest digital currency is well below the record high of $ 4,900, which reached early November. It has fallen 25% so far in 2022.
Altcoins to see
Other top cryptocurrencies were significantly higher, but most profits were modest:
- Avalanche – 4.2% increase
- Polkadot – 3.2% increase
- Shiba Inu – 2.9% increase
- Terra – 1.4% increase
- Solana – 1.2% increase
- Cardano – 0.9% increase
- XRP – 0.5% increase
- Dogecoin – 0.5% increase
- Binance Coin – 1.0% down
Cryptocurrencies have been struggling since it was revealed in November last year that the Federal Reserve intends to reduce monetary stimulus. On Wednesday, India confirmed that it did not ban cryptocurrencies, but instead plans to tax capital gains on it at a high 30 percent tax rate. The Government of India has also announced that it will create its own blockchain-based cryptocurrency, the “Digital Rupee.”
Traders are also waiting to hear how the Biden administration will push forward with cryptocurrency regulation. It has been reported to submit a presidential directive instructing the federal government to set a new policy on new digital currencies.
Bitcoin fell below $ 40,000
Bitcoin prices have been under serious pressure since the Fed met in early November 2021. Cryptocurrencies peaked at nearly $ 69,000 in November.
From there, it was almost downhill. The downtrend continued from most of December to January. After peaking above $ 51,000 in late December, digital currencies fell to nearly $ 33,000 in late January. Bitcoin has fallen by more than 17% since the beginning of the year.
Nevertheless, Bitcoin remains at the top of the list of the most valuable cryptocurrencies by market capitalization.
The Fed’s signal rate rises prematurely and bond purchases end
At a meeting in January, the Fed announced that it would continue to curtail bond purchases and suspend bond purchases by early March. Central banks have also shown that they are ready to raise rates soon, and that many experts expect rate hikes to occur as early as March.
In a prepared statement, the Federal Open Market Committee predicted that raising the federal funds rate target would soon be appropriate as inflation far exceeds 2% and the labor market is strong. I have. “
Market analysts are now hoping that the Fed will raise interest rates at its upcoming March meeting. According to CME’s FedWatch Tool, the market is currently priced at 100% with a probability of rising rates in March. The only open issue is how much. The market expects a 91% chance of an increase of 25 basis points, with the rest forecasting a larger increase of 50 points.
“Although the Fed is starting to raise interest rates, a more important step has yet to come to start running out of balance sheets, and the Fed hasn’t provided additional details in its post-meeting statement,” Greg says. McBride, Chief Financial Analyst at the Bankrate. “The combination of rate hikes and ultimately a shrinking asset portfolio completes the transition from full throttle to braking the economy.”
Inflation has risen at the fastest pace in 40 years last year, and the Fed aims to curb inflation, but not over-brake. The resulting diminished stimulus disrupted financial markets in 2022.
Editorial Disclaimer: All investors are encouraged to conduct their own research on their investment strategies before making investment decisions. In addition, investors recommend that the performance of past investment products does not guarantee future price increases.