Tuesday, May 17

Why is the price of cryptocurrencies falling?

What is happening with cryptocurrencies, the most influential of which such as bitcoin, ether or even binance coin had reached records in 2021? Since January 1, the majority of them have seen their prices drop.

Bitcoin, in particular, has lost 12% of its value in recent days with a low briefly seen below $ 40,000 on January 10. Data that betrays the concerns surrounding cryptocurrency today. The reluctance of investors and speculators is mainly explained by waiting for a decision from the FED (the US Federal Reserve).

While the years 2020 and 2021 had authorized the United States to produce mass liquidity in the markets, the FED adopted a very flexible monetary policy. However, the Federal Reserve should tighten the screws in order to control inflation. As a result, global stock markets are also sinking, as are most cryptocurrencies. This is evidenced by the evolution of the price of bitcoin over a month which began a significant fall since January 1 (photo below).

Considered a safe haven, like gold for example, by investors as long as interest rates remained low, bitcoin and other cryptocurrencies had attracted buyers who were quicker and more open to making risky investments. . If the Fed acts in favor of a less permissive policy, investments in crypto-assets would in fact become less attractive.

A decision expected this Friday

These elements therefore explain the concern of investors in recent days. Everyone is waiting for the US inflation figures which will be released this Friday, January 14. A crucial date for this new year.

“If the published data exceeds market expectations, we can expect even more bitcoin sales because investors calculate that the higher the inflation, the faster the Fed will have to act,” Marcus Sotiriou told AFP. , analyst at cryptocurrency broker GlobalBlock.

Reference-www.cnews.fr

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