Bitcoin’s horror month continues after failing to break past $50,000 for a second week in a row. The world’s largest crypto by market capitalization has struggled to break past $48,000, currently hovering just above it. It could get worse before it gets better as the FED plans to accelerate withdrawal of the monetary stimulus with sky-high inflation rates.
The Federal Reserve monetary policy meeting is being held this week. According to reports, the US Central Bank will (as expected) slow down the money printer in order to fight the high inflation rates. The meeting should end today with the FED’s plans being to cut $30 billion worth of asset purchases from the current $120 billion per month. That’s double the current inflation rate, and obviously having a strong effect on Bitcoin and the crypto market.
30% Down
Bitcoin reached its record price back in November. Experts fully expected it to soar to new heights then, yet it dropped below $60,000 at the beginning of December. Those drops continued in the coming weeks, with Bitcoin now trading around $48K. It hasn’t been able to break past $50K, although it tested it a few times. The cryptocurrency is down over 30% from its record price a month ago, which represents one of the biggest drops it has ever experienced.
Bitcoin often trades in tandem with traditional currencies. As much as some crypto investors wouldn’t like to admit it, high inflation rates affect it. At the moment, no one is interested in buying Bitcoin at the current levels. There might be one last push by the end of the year by traders, with bulls looking for an aggressive way in.
Some people are not that optimistic. Laurent Kssis, the CEC Capital director, says that the push over $50,000 may happen at a much slower pace than expected. He believes that buyers are uncertain of the market direction, despite the strong technical indicators.
The Fear & Greed index is currently pointing toward extreme fear, which has been going on for a month. It’s clear that the current sentiment is against buying, but that shouldn’t scare investors in the long term.
2022 a Record Year for Crypto?
Many experts believe that the current setback is just a normal development. It’s kind of a calm before the storm that might follow in 2022. Let’s keep in mind that many cryptos reached record heights this year, despite the recent pullback. Bitcoin, Ether, and many others are in prime position to reach even higher prices, and all they need is a little push.
That might come next year or even in the last few days of 2021, as some expect. One thing is for sure. Bitcoin has managed to stabilize in the mid-$40,000s, which is a good sign for investors planning ahead. It shouldn’t drop below $40K, staying in a prime position for a bull’s rally that’s certainly coming, hopefully much sooner rather than later.
If you’re an investor, keep your coins in your wallets – you will profit later.