- The interest rate hike to curb inflation by the U.S Federal Reserve remains the biggest trigger for not just Bitcoin but most other assets as well.
- As one expert told CNF, Bitcoin now has a prime opportunity to present itself as the “non-state, non-sovereign, and emerging store of value,” but even this will be greatly tested.
The cryptocurrency market has not had the best year in 2022, with the Russian-Ukraine conflict being pointed at as the prime factor. However, according to one expert, the U.S has just as big an influence on Bitcoin’s price. Speaking to CNF, the expert said that the U.S Federal Reserve’s interest rate hike will just be as big for crypto, and that while the Russian invasion has seen Bitcoin dip, it presents a prime opportunity for cryptos.
At press time, Bitcoin is trading at $39,000, down by 5.8 percent in the past week. As CNF reported, BTC took a dive below $40,000 yesterday after a short-lived surge that followed Biden’s executive order on cryptos.
Altcoins haven’t fared any better. Ethereum is trading at $2,600 while Binance Coin changes hands at $374, with both being down in the past week. Dogecoin and Crypto.com’s CRO have shed 8 percent, while Solana and Axie Infinity are down 11 percent. Fantom has shed over 33 percent.
According to Eliézer Ndinga, the director of research at institutional crypto services provider 21Shares, the U.S Federal Reserve is the biggest player in which direction crypto prices take next.
Speaking to CNF, he stated, “Macroeconomic triggers include the Federal Reserve’s infamous interest rate hike to curb inflation which is at its 40-year-high now. The hike is expected to float at 0.25%; a decision is scheduled to be made on March 16.”
“Another related trigger that’s been affecting the markets is the Consumer Price Index which will also be affected by next week’s interest rate hike, which will essentially track how much consumers will be impacted in terms of loans, investments, savings, job prospects, and prices for goods and services,” he added.
In consequence, Bitcoin is down by 6.4%, Ethereum is down by 8.5%, equity 3.5% over the past week. Meanwhile, oil and wheat have surged historically as the breadbasket of the world continues to bleed.
The Russian-Ukraine conflict has also played a major part in determining asset prices in recent weeks. Ndinga, who also heads research at leading index token issuer Amun, noted that there have been record inflows into commodities, including gold and palladium, which reached all-time highs in light of the conflict. This capital most likely came from equity markets as investors sought to reduce their exposure to risky assets.
In the conflict lies an opportunity for BTC, Ndinga believes, stating:
Bitcoin’s dominant use case in the past couple of weeks has been to serve as a neutral and non-sovereign payment alternative to support the Ukrainian government. It’s clearly time for Bitcoin to shine as a non-state, non-sovereign, and emerging store of value — and this decade has clearly been battle-testing this thesis.
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