The Federal Reserve meeting this week is making crypto investors nervous. The crypto market expects the central bank to reduce its bond-buying pace rapidly due to the rising inflation in the USA.
In the face of macroeconomic unpredictability and uncertainties, Bitcoin has experienced a significant slump. While the world’s largest cryptocurrency had soared to $68,991, its all-time high, in November, its value has dipped to less than $48,000. Ether, the world’s second-largest cryptocurrency, has also had to bear the brunt of the rising inflation. Right now, it’s trading at less than $3900, which is a 20% decrease from its all-time high of $4865.6.
As 2021 gives way to 2022, the Federal Reserve is also set to become faster with its rate-hiking, which means there’s further trouble ahead for cryptocurrencies in the near future. Due to the higher interest rates, it’s expected that crypto investors will dump their crypto assets in favor of something safer, such as value stocks.
According to Edward Moya, OANDA’s senior market analyst, the value of Bitcoin will hover between $42,000 – $52,000 before any decision is confirmed by the FOMC. Over the last two years, Bitcoin’s meteoric rise has been partially attributed to a common narrative – the use of cryptos as a hedge in the face of inflation.
Crypto exchange Eqonex’s CEO, Matt Blom, said that if the Fed delays the tapering pace and surprises the market, Bitcoin investors will benefit owing to a rapid relief rally. As it stands, only time will tell how the US crypto market fares after the Fed meeting.