Cryptocurrencies are still struggling to recover from the start of the virtual currency crisis this year. The volatility of crypto-currencies does not reassure investors who remain hesitant following the unabated global inflation. Crypto-currencies were created to escape the control of banks: in particular interest rates and inflation which nibbles wealth little by little. Very quickly this founding idea of crypto-currencies lost all its credibility because it was contradicted by decisions of the monetary authority which is the FED. The decisions of the US Treasury are affecting cryptocurrencies terribly and pushing them further into the crisis that began in October last year. So the idea of cryptocurrencies independent of the monetary control of banks and central banks is a legend.
The decisions of the US central bank have a strong implication on cryptocurrency assets. The FED, which took a historic decision to raise key rates last Wednesday, continues to affect cryptocurrencies. This decision had been awaited by economists for several weeks. Key rates increased by 0.25%. And they will continue to rise by 0.25% with an increase of between 0.25% and 0.50% each quarter and this throughout the year. This increase, considered modest, could signal the end of recess. The FED had kept its key rates at zero since to stem the consequences of the 2008 real estate crisis. We are already wondering about the consequences of the FED.
The fate of cryptocurrencies now hangs on the decisions of the US central bank. Already while waiting for the announcement of the FED’s decision, cryptocurrencies were in uncertainty. The crypto-asset markets were tormented by this decision which could cause another fall in cryptocurrencies. It was highly likely that a decision by the US central bank would have catastrophic effects on cryptocurrencies. Concern had won over all investors. And for good reason, the prices of crypto-currencies have fallen dangerously in recent weeks. The bankruptcy of FTX, the second largest crypto-asset exchange, has had even more adverse effects on the markets, causing an unprecedented downward trend in cryptocurrency prices. We will come back to this bankruptcy in our next article. But already it should be remembered that the very negative impact of last week of this bankruptcy of FTX could still get worse with even more painful decisions by the FED on the crypto-currency markets.
The decisions expected this Wednesday after the meeting of the American central bank will deal an even harder blow to the financial markets. The seismic effects caused by the falling traditional financial markets will be felt in the cryptocurrency markets which are struggling to recover. With the decrease in its overall capitalization which has tumbled by 4.03% in recent days, it is already clear that the cryptocurrency markets are already expecting a negative result following the Fed’s decision this week. Its capitalization is located around 802.03 billion dollars. It is certain that this will go down further.
The first victims of this depressing state of the cryptocurrency markets are obviously the leaders of these virtual currencies. So it’s Bitcoin and Ethereum. These cryptocurrency leaders are in decline. Bitcoin has lost more than 3.15% for a few days and it will continue its decent in the coming days. And during the same period, Ethereum the largest altcoin also lost more than 7.25% of its capitalization.
Other altcoins in the top 10 market capitalization also fell. Binance (BNB) is down 4.19%, Ripple(XRP) is down more than 8.79%, and Cardano(ADA) loses 6.69% in value as Dogecoin (DOGE) and polygon(MATIC ) have respectively lost up to more than 10.02% and 7.08% during the last few days.
With all this decent, investors preferred to wait for the decision of the US central bank to react. As the exponential moving average EMA has fallen from 9 EMA to less than 20 EMA in recent days, the tenseness has won over all investors. The slightly bearish trend is therefore mainly due to the refusal of the latter to take risks to protect the even more difficult positions of bitcoin which continues to tumble.
For the moment, the news from the American central bank has not caused the catastrophe that cryptocurrency investors feared. The trend has been quite positive. Ethereum has regained strength. Its price has moved above $1,150, which is slowly approaching the major hurdle to clear to rebound, located between $1,230 and $1,250.
