Why is the cryptocurrency market struggling to keep up?
- Dull moments, what are those on a blockchain? Because there aren’t any! Here is what’s happened this weekend.
- Crypto prices are struggling to be afloat in 2022. The Feds are fighting inflation and unrest in Kazakhstan, leading to a downward market.
- The NFT economy is still a nursery. However, NFT marketplace transactions have had a record-breaking start in 2022.
- Here are four life-saving tips that will help you navigate downfall and maintain composure when the market is falling.
The Crypto market is going down for real as the Feds started to unwind stimulus in the inflation battle.
And it continues as the significant cryptos are volatile for the second consecutive week. Since January 1, 2022, Bitcoin has been down by 10%, and ETH has taken a hit of 15%. The crypto market cap is closing to $1 trillion since its last peak in November. It isn’t easy to want an economic backdrop happening to the recent crypto market. It includes the Omicron variant’s impact on the workforce, historical inflation, and the Federal Reserve’s plan to boost the growth post-pandemic era. Thus there is a lot to know about and let’s dive straight into it.
The Fed officials are busy balancing multiple macroeconomic threats, from runaway inflation to the rise in Omicron. In a new report, the World Bank predicts that the global economy will grow slowly in 2022 as the Omicron variant sidelines work, the supply chain distresses, and the central bank is slowing down the funneling of money. On January 11, 2022, the Fed chair Jerome Powell talked with the Senate and came up with the idea of slashing out the interest rate hikes due to the inflation and the data of jobs in the coming months. In addition, the new consumer price index data was able to add more clarity. Powel was indicating that there are chances that they will create a “digital dollar” as all the countries are trying to make a central bank digital currencies.
Is the news impacting crypto more than the stock market? The Crypto Market is speedy and complicated, so it is tough to know what causes affect the market. But the fact that bitcoin is inflation-resistant plays a very important part in the narrative. On November 8, 2021, BTC touched her all-time high of approximately $69,000 remarkably, and it was the same day the U.S. reported its highest inflation rates in four decades. More broadly, volatile asset classes like crypto and tech stocks, which saw rapid gains during the pandemic-stimulus era, may, as The Wall Street Journal notes, see similarly swift reversals “in moments of market stress.”
An internet blackout in Kazakhstan has helped in the sale of Bitcoin. Why? The country accounts for nearly 20% of the world’s mining power (the country’s miners are second to the U.S’s 35%), so when political unrest shook the Central Asian country last week, it escalated internet blackouts, forcing a majority of miners offline. Reports suggest that the total mining power, i.e., “hashrate,” was seen declining since the outage, but it is still at all-time highs.
Why is the matter of such concern? If you are one of the HODLer, the month-to-month crypto swings probably won’t affect you. But for those who trade daily, there is a silver lining. Last week, it was observed by the investors that Bitcoin would continue to lose its value while the gold dominates at different fronts. Various analysts showcase that miners are shifting out of China to trading companies in North America. The technique is changing from selling to holding the coins, which will boost BTC in the next year. One of the most prominent investors, Bill Miller, said that he now has 50% of his net worth in Bitcoin and other cryptocurrencies. He says that the typical investor should ask themselves, what do they have in your portfolio, and what is the track record? The most common answer will be nothing.