six months ago Bitcoin The most popular cryptocurrency in the market, reached an intraday high of $68,991, but has since fallen nearly 50% in the context of monetary tightening To combat high inflation.
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According to market data consulted by Efe, Bitcoin fell 49.92% on Sunday at 10:30 AM GMT from its maximum recorded on November 10, 2021 to $34,550. Since the beginning of this year Cryptocurrency experienced a downtrend, A decrease of 25.4% (closed in 2021 at $4,633,65), in a few months due to geopolitical tensions caused by the Russian invasion of Ukraine and high inflation.
As a result, central banks have changed their monetary policies, which have become more aggressive in the case of the US Federal Reserve (Fed), which has already raised interest rates twice, the last of which was last Thursday with an increase of half a cent. The point, and even more lax in the case of the European Central Bank (ECB) which, although it has not at the moment set a date for an interest rate hike, has toughened its talk and commented that it will start withdrawing the stimulus made possible by the pandemic.
Coinmotion’s director of Spain, Raul Lopez, considered that the Fed’s announcement of its rate increase put the markets on alert and “probably” led to a loss of value for cryptocurrencies. With the first rate hike by the Federal Reserve this year, which took place on March 16, Bitcoin dipped slightly, but reached a high of $47,967 by the end of the month.
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However, when the minutes of the April 6 meeting of this organization predicted a possible sharper rise of half a point, this digital currency fell by 4.32%. Last Wednesday, the Fed implemented a second increase, and since then the most popular cryptocurrency has lost just over 13%. On that day it closed at $39,800. According to analysts consulted by Efe, the depreciation and extreme volatility of bitcoin in recent months have responded to various factors, as well as a tightening of central bank rhetoric.
Raul Lopez explained that the file geopolitical tensions, Like the war in Ukraine, health risks, such as the appearance of the omicron variant of the coronavirus at the end of November 2021, affected its price. He also argued that the European Commission’s MiCA proposal to regulate the cryptocurrency market generated “some fear in the markets.”
Historical heights of Bitcoin
Since the end of 2020, the bitcoin price has seen an upward trend and rose from $10,000 to over $60,000 in the second quarter of 2021. Although it later saw a slight correction, at the end of the year it reached all-time highs that were close to 69,000 dollar.
This growth in the price of Bitcoin has been driven by various issues, such as its adoption as legal tender in El Salvador or China’s ban on mining and exchange Cryptocurrencywhich could have had an impact on speculators for Bit2Me’s director of institutional relations, Javier Pasteur.
In addition, Lopez recalls that inflation fueled the “largest bullish rally in bitcoin history,” as investors searched for a condition to “make their capital profitable.” Over the course of the year, bitcoin has recorded tremendous volatility, however, some analysts point out that this cryptocurrency is a refuge value because, as Javier Pastor recalls, it is “rare and limited in its issuance.” “It is true that it is volatile, but the reason for this is that the total capitalization of its market remains low,” Pasteur says.
After the outbreak of the Covid-19 epidemic, the cryptocurrency market recovered much faster than the traditional market, which according to Lopez, “was a sign at the time that cryptocurrencies could be a haven of value.”
IG analyst Diego Morin notes that bitcoin is an “alternative investment” that attracts younger investors who are seeking “a higher return than what has been developed and conquered in the traditional market,” but also warns of its high volatility “on the same day we can see spikes.” With more than 5% or corrections of more than 10%, so this also needs to be taken into account,” says Maureen.
The future of the cryptocurrency market
The Fed is expected to continue to tighten monetary policies this year, so, according to Raul Lopez, markets will develop depending on whether the measures taken by these organizations are those that governments expect, which “could partly affect the price development, not Only bitcoin but other cryptocurrencies.”
For his part, Diego Moren warned that in 2017, with the previous cycle of Fed rate increases, the first “sudden” upward movement of this digital currency began, and therefore, he stressed that he does not rule out that in the next few months “there will be some bullish rally again.” In the case of Bitcoin.
EFE
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