Monetary conditions around the world have tightened, sending the crypto market in a crash. The pressure of negative inflation is obviously too much to bear for Bitcoin, which remains in a bearish market. Currently clinging to just over $19,000, experts predict even bleaker times for crypto. Conflicting rate hike expectations are making Bitcoin’s price even more volatile, and some experts believe that the price drops will continue, with Bitcoin essentially hitting $12K.
Is that the darkest night before dawn? No one knows for sure if or when crypto makes a comeback, but the current situation doesn’t instill a lot of hope.
Waiting on the September 21 FOMC
All eyes are pointed at the September 21 FOMC. The Fed two day meeting started on September 20 and will end on September 22. Everyone expects the interest rates to go up once again, this time by three-quarter points. It can lead to another massive price decline for Bitcoin.
Over the past week, Bitcoin suffered a 15% decline as the market braced for monetary tightening policies. The August Consumer Price Index exceeded expectations by around 0.2%, while the year to year inflation rate is 8.3%. All of that has led to massive price increases on many products, and experts believe an even bigger financial crisis is coming. In a time where Bitcoin was poised to shine, it has failed to hit new heights and dragged the crypto market down with it.
Is there reason for optimism? Not in the short run. Experts think that the bearish trend will continue. The price decline of last week was the worst compared to other CPI-related drops in 2022. A mismatch in expectations as well as uncertainty among investors is what fueled it, and it seems that the declines don’t stop here.
Many experts believe that a massive drop toward $12K is coming as interest rates are climbing higher. Even if the Russia-Ukraine war stops, its effects along with the reeling effects of the COVID-19 pandemic have brought the world on the bring of financial disaster. Bitcoin and cryptos are feeling the heat too. Crypto expert Doctor Profit has said that the FOMC’s decision will bring a bloodbath to the crypto market, saying that Bitcoin’s price has hit rock bottom at current levels.
What’s Next?
The bottom is already forming for Bitcoin’s price at current levels, and Doctor Profit thinks that’s a good thing. He said he expects prices to go between $18,000 and $25,000 until March 2023, although that’s without including the rising interest rates in the equation. As he said, if the rate goes up to 1bps, there will be blood.
As of right now, the future of cryptocurrencies is unclear. Ethereum just upgraded its network to go from mining to proof of stake, but the Merge didn’t have the positive effect many were hoping for. Bitcoin remains the only minable crypto right now, but it’s not valuable at these prices. This year is probably a dead end, so we’d just wait and see what spring brings.