The last few months have been very difficult for Bitcoin (BTC) and for other cryptocurrencies. Moreover, the sector is still in sharp decline due to the war in Ukraine and inflation.
Let’s see in this article what is happening right now and what are the latest updates you should know about – learn more about Young Platform.
What happens to bitcoin?
This year the Bitcoin has come under heavy selling pressure and followed the bearish trend of many other regulated assets, such as technology stocks and growth stocks. With rising inflation and the signal from the Federal Reserve to raise the federal funds rate (the overnight rate at which banks lend to each other), cryptocurrencies, like other stocks growing, have lost value.
This is partly because as federal funds rates rise, yields on safer assets, such as Treasuries, also rise. As a result, more volatile transactions, such as Bitcoin, which has seen a meteoric rise in 2021, become less attractive to users.
Moreover, the Fed has embarked on the difficult effort to reduce its $9 trillion budget by reducing the number of bonds it holds on its balance sheet, a process known as “quantitative tightening”. The Fed’s goal is to reduce its bond holdings by $95 billion a month by August or September, shrinking its balance sheet by more than $1.1 trillion in one year. While the exact impact of this move is uncertain, the Fed will essentially withdraw cash from the economy, possibly leaving fewer funds to invest in riskier assets like cryptocurrencies.
What will be the consequences for Bitcoin?
Nobody can say for sure how the price of Bitcoin will develop over the next period. It is therefore impossible to predict what the consequences will be for Bitcoin and other cryptocurrencies.
Since Federal Reserve monetary policy is still partly unknown, Bitcoin may also decline in the near future and not continue the recent positive trend. The market is currently expecting quantitative tightening, which will likely increase yields on safer assets and remove liquidity from the economy, two factors that could reduce Bitcoin’s attractiveness and lower its price. price.
Finally, we remind you that, although there are currently many concerns in the general market, it is possible to buy Bitcoin and other cryptocurrencies on the most reliable exchanges.