Bitcoins showed some strength on Tuesday, ahead of Fed’s chair Jerome Powell testimony before US Congress later in the day
This week is marked with heavy losses in the new-age asset class
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New Delhi: Bitcoin breached $40,000 mark on Monday following the weakness in the riskier asset class as investors lacked risk appetite. This week is marked with heavy losses in the new-age asset class.
However, Bitcoins showed some strength on Tuesday, ahead of Fed’s chair Jerome Powell testimony before US Congress later in the day, which may signal for the tapering cues and expected rate hikes later in the evening.
Higher inflation, Hawkish stance from the central banks and extreme volatility is weighing on the crypto markets. Goldman Sachs’ projection of four rate hikes in 2022 has sent the crypto market in deep red.
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All eyes are set on Powell’s comment before the Congress, who has cleared its aim of curbing the inflation. The markets will be looking for guidance from the Fed Chair as financial markets dislike uncertainty.
Edul Patel, CEO and Co-founder, Mudrex said that there is a lot of uncertainty amid speculations regarding the announcements that will be made by the Federal Reserve Chairman.
“With inflation going almost out of hand, we could likely be staring at some drastic measures by the US Federal Reserve. This uncertainty is causing the market to react jittery,” he added.
The total market-cap of the crypto market has slipped below the $2 trillion mark as the top behemoth loses its sheen. The traded volume of the crypto market has taken a big hit as the daily volumes have remained sub 100 billion.
The world has seen an unprecedented amount of money printing in the last couple of years which has shown its effect on asset prices across all asset classes.
Shivam Thakral, CEO of BuyUcoin, said, if tapering is done it will decrease the liquidity of fiat in the market and it may have a significant impact on crypto prices and other asset prices across the globe.
“We are hopeful that his testimony before Congress will create a positive sentiment in the crypto market,” said Thukral.
Crypto experts suggest that investors should not read too much between the lines Powell has shown his optimism for crypto and blockchain earlier.
Powell recognised inflation as the key concern but has not been vocal about rate hikes, said Patel. Though, “the Federal Reserve would be majorly focused on tackling the inflation situation”.
Not only Bitcoin, Ethereum breached the $3,000 mark on Monday. Other top tokens including BNB, Solana, Cardano, Terra, Polkadot, Avalanche have lost up to 15-20 per cent of their value in the last one week.
Hawkish commentary from Powell could test the support for riskier assets later in the day. However, experts believe that dips are an opportunity to buy.
Thukral of BuyUCoin said that seasoned investors are buying the dips and increasing their holdings, whereas Patel of Mudrex suggested investors to do dollar cost averaging (DCA) to get off the pain of timing the market.
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