The cryptocurrency market hasn’t weathered the storm as the popular bitcoin has slid back to $35,000. Having lost about 4% in the last 24-hours, the market looks bearish and bullish at the same time. Ethereum, the world’s second most popular crypto, which was closely following BTC has also taken a slight dip. But it remains in the $2,300 range.
The slight u-turn taken by the popular cryptocurrencies may have to do with the Federal Reserve indicating that it could raise interest rates for the first time in more than three years. This is part of the US central bank’s plans of a broader tightening of its “easy monetary policy”. Jerome Powell, the Fed Reserve’s chair, said they could move on an “aggressive path”. He believes there’s room to raise interest rates without threatening the labor market. This comes as inflation is running at its hottest level in nearly 40-years.
Edward Moya, a senior market analyst at Oanda, says it is clear the risk of more rate hikes is elevated. He warned that the Fed may raise rates at every other meeting. The balance sheet runoff starts in May or June. However, Moya believes the panic selling of cryptocurrencies may be over. He said a rally in alternative cryptocurrencies could be around the corner, that is, if BTC stabilizes between the $40,000 – $50,000 range.
Analysts point out that there is a major resistance for the popular crypto at the $40,000 – $43,000 range. This could very much stall the current price bounce. Investors are bullish and optimistic at the same time. $40,000 mark signals a recovery phase for the crypto market.