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On December 15, the regulator announced the acceleration of the curtailment of the economic stimulus program. Experts explained why this increases the likelihood of another collapse of digital assets and their immersion in a deeper correction
On December 15, the US Federal Reserve announced that it would accelerate the halving of the bond buyback program from the market – from $ 15 billion to $ 30 billion per month. The redemption of US Treasury bonds will be cut by $ 20 billion, mortgage bonds – by $ 10 billion.
Bitcoin reacted to the regulator’s statement with growth. The price of the cryptocurrency rose to $ 49.5 thousand (6.4%). On December 16, the asset is traded at $ 49.1 thousand. Experts from RBC-Crypto explained why the Fed’s decision affected the crypto market quotes and how the acceleration of the reduction of the incentive program could affect digital assets.
All markets in focus
The Fed’s decision to accelerate the curtailment of the economic stimulus program will lead to a decrease in cash injections into the stock market, which will slow down its growth, says Nikita Soshnikov, director of the Alfacash cryptocurrency exchange service. According to him, because of this, the crypto market is in an extremely unstable state, since the Fed’s decision may lead to a collapse of the stock market, which will inevitably pull digital assets down with it.
“At the same time, even if a collapse occurs on the crypto market, it is likely to recover quickly enough and move to growth, as it already happened in March 2020,” the expert noted.
During the Fed’s press conference on December 15, many important things were said that could affect the crypto market in the medium term, says Mikhail Karkhalev, financial analyst at Currency.com crypto exchange. According to him, the regulator is surprised that people who lost their jobs during the lockdown do not plan to look for new jobs in the coming months, since they have good savings.
“These savings were created due to the growth of“ people’s companies ”- shares of garbage, unprofitable and credited companies, as well as due to the growth of the crypto market, the real estate market, etc.,” the analyst explained.
According to Karkhalev, the rate hike primarily hits unprofitable companies, while the giants will continue to grow and “drag” the indices up. Powell himself said that in 2022 the growth of people’s companies will come to an end, but to what “class” of assets bitcoin can be attributed, the analyst asks.
“If to the folk, then we will have crypto winter, if to the giants, then the growth will continue. In any case, I think that bitcoin will still grow up to $ 60 thousand, in an attempt to aim at the historical maximum, “Karkhalev predicted.
Near and medium term
Now the price of bitcoin is under a downtrend, explained Andrey Podolyan, CEO of Cryptorg. According to him, the growth of the asset of recent days did not particularly affect the situation, since the key level at the moment is the mark of $ 52 thousand. It is there, according to the expert, that the turning point of the negative trend is located.
To continue a further decline in the value of bitcoin, “bears” need to break down the level of $ 46.7 thousand. This opens the way for the asset to $ 42 thousand, Podolyan predicted. On December 4, the price of the first cryptocurrency had already decreased to $ 42 thousand.Then the coin fell in price by more than 20% per day, provoking a massive liquidation of positions by $ 2.5 billion.
Long term effect
The accelerated curtailment of the program of economic incentives will definitely provoke turbulence in the stock and cryptocurrency markets, says the director of the cryptocurrency exchange service Alfacash. He advised cryptoinvestorm to prepare for abrupt changes in the Bitcoin exchange rate and not to panic.
“Even if the crypto market plunges into another crypto winter, which may happen in the summer of 2022, by the second half of 2023 I expect a new bullish cycle in bitcoin ahead of the next halving, which will take place in the spring of 2024,” Soshnikov says.
Halving is a halving of the block reward that occurs every four years. Initially, miners received 50 bitcoins, in 2012 this amount dropped to 25 coins, in 2016 – to 12.5. On May 11, 2020, it dropped to 6.25 bitcoins. Halving occurs every 210 thousand blocks mined. The next halving is expected to take place in 2024.
Already now, bitcoin has the potential to grow up to $ 150 thousand, the expert is sure. In his opinion, the only question is when this potential will be realized.
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