Crypto Market Drops Below $1T as It Braces for Another Interest Rate Hike

Crypto Market Drops Below $1T as It Braces for Another Interest Rate Hike

• The crypto winter has swept away two-thirds of the cryptocurrency market value this year.
• Bitcoin (BTC) has also deepened its decline as it fell below $19,000.
• A further expected rise in real interest rates from the Fed continues to pressure risky assets, including cryptocurrencies.

The cryptocurrency market capitalization has deepened its decline this week by deflating to less than $1 trillion, maintaining this behavior for the last 24 hours, according to data from CoinGecko.

Likewise, Bitcoin (BTC) slipped below $19,000 on Wednesday morning and was trading at $18,883 as of 10:44 a.m. New York time. Ether, meanwhile, erased Tuesday’s gains and fell about 4.4%.

The world’s largest token has not stopped falling for the past two weeks, slipping below the $20,000 mark. Since Monday, the price of BTC has dropped more than 6% of its value, and some analysts consider that it could fall even more.

Impact of Fed Policy on Cryptocurrencies

Likewise, the crypto market has lost around two-thirds of its value, after reaching $3 billion in November last year. BTC’s losses already account for almost three-quarters of its value since its all-time high of $68,000.

All other cryptocurrencies have been swept up in the crypto winter, which could drag on for a while longer as the US Federal Reserve and other central banks struggle to contain rising inflation.

The rise in real interest rates has mainly hit risky assets, including cryptocurrencies and NFTs. “Weak-handed” investors have abandoned their cryptocurrency positions to seek refuge in safer assets.

The aggressive monetary policy of the Fed has only increased the pressure on the prices of cryptocurrencies. Bitcoin appears to be closer to the $10,000-$20,000 range than the $20,000-$30,000 range, according to US investors surveyed by MLIV Pulse in its July forecast.

Now the token is nearing the low point it hit in June — roughly $17,600 — after million-dollar hacks and bankruptcies of several crypto lenders and hedge funds.

“The macro narrative is very hard to be able to let go and will drive risk assets,” Kevin Loo, head of investment insights at IDEG Asset Management Ltd., told Bloomberg. He added that now that Bitcoin is below $20,000, “It’s likely that we could actually go slightly lower.”