The entire crypto market including Bitcoin has reached its lowest level since December 2020. With the current price, we have arrived in the middle of the bear market! But you do not have to despair, we are here for you.
Want to know how crypto and bitcoin are evolving in the long and short term? Where does the price go? We have taken on the task and will review all the important factors for you: from basic data until Fibonacci support – from block to chain.
The last issue is here.
Bitcoin price reaches $ 20,000 – Can you see a long-term trend?
After a two-day meeting yesterday, the US Federal Reserve decided to raise interest rates by 0.75 percentage points. Doing so raises interest rates to a range of 1.5 to 1.75%, the highest increase since 1994!
An increase means that Investors less capital to invest, is available. Overall, less money is flowing into risky assets such as crypto or bitcoin or technology stocks. Bitcoin usually sets the direction for the entire crypto market.
Above all, the Fed has made price stability and full employment its mandate – a target of 2% inflation is the target.
The European Central Bank (ECB), in the form of its President Christin Lagarde, has also indicated that it intends to raise the key interest rate in Europe. In a letter published on 23 May, Mrs Lagarde suggests that this will help combat inflation.
“Based on the current outlook, we are likely to be able to leave negative interest rates by the end of the third quarter.”
The fact that the ECB is in a dilemma is self-evident: on the one hand, we have devastating inflation of 8.1% in the euro area, on the other hand, the member states of the South are heavily indebted. If the ECB raises interest rates too much, there is a risk of national bankruptcy for some countries, if the ECB does not raise interest rates, there is a risk of even worse inflation. Inflation, which is at the expense of all our prosperity.
After the ECB reinterpreted the target of price stability at 2% annual inflation, it is acting more hesitantly than the Fed. There is no real will to fight inflation, instead it is promised to give the indebted countries even more support. Purchases of government bonds are said to affect especially Italy, Greece, etc.
Are cryptocurrencies popping up?
What does this mean for the Bitcoin price and the crypto?
One thing above all: uncertainty. Investors do not really know what to do with their money. Gold, stocks and crypto have experienced a complete sale for several months. Bitcoin is 67%, S&P 500 20% and gold 10% below their respective records.
Financial assets are not rising, but oil, gas and food are. By using “commodity” wheat, for example, consumers can see how much the price has risen. In summary, everything is getting more expensive, people are withdrawing their money from all investments to afford the basics. Why is the government not doing anything about it?
At least the Fed is trying, but the ECB is not. But what the Fed accepts is nothing short of a recession. By raising interest rates too much, central banks risk slowing down the economy too much. GDP in the first quarter of 2022 already suffered from a decline of 0.3% – the second quarter will not improve due to rising key interest rates.
We are not just heading for a crisis. We are in the middle of the crisis.
Crypto-assets should do well with this development, at least in the long run. With the two central banks keeping interest rates low in the long-term trend, we are heading for a period of money abundance – crypto should benefit. Low interest rates mean more capital, and more capital means more demand for risky assets.
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