Crypto wrap: RBI MPC unlikely to affect global crypto prices, experts say
The cryptocurrency market traded unevenly over the past week, although major cryptocurrencies traded in the red. The market capitalization remained above 1 trillion dollars. However, major digital tokens such as Bitcoin and Ethereum fell by over 3.5 percent.
On Friday at 4 p.m., Bitcoin had the highest market value, trading at $23,157, over 3.6 percent below its price seven days ago. During the last 24 hours, however, it has increased by more than 1 percent.
Ethereum, the second largest cryptocurrency, was trading at $1,661, up 2.27 percent in the last 24 hours. In the last seven days, however, it has fallen 3.7 percent.
On Friday, the Reserve Bank of India (RBI) raised the repo rate by 50 basis points to 5.4 percent to control rising inflation. In India, inflation has remained above the upper tolerance level of 6 percent for six months.
However, the RBI rate hike is unlikely to affect crypto prices in India, according to experts.
“RBI’s MPC meetings on a stand-alone basis have very minimal or no impact on the global cryptocurrency markets. Historically, Bitcoin prices always react to US FOMC meeting results.” Jaikrishnan G, Partner, Financial Services Consulting, Grant Thornton Bharat, said.
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He continued, “On a macro level, all the major economies have been raising policy rates lately to control inflation, and this is sure to have a short-term negative effect on crypto prices.”
Experts are still calling with caution
Global inflation has continued to remain high. Even after a marginal cooling, commodity prices have not reached the same level as six months earlier. Experts believe that investors still need to be cautious.
“We expect a range-bound movement in the crypto market, but something negative in terms of inflation, recession or regulatory issues could dampen sentiment and trigger selling again,” Dileep Seinberg, founder and CEO of invoice payment and utility crypto platform MuffinPay, said.
On Thursday, Britain’s central bank, the Bank of England, raised interest rates by the most in 27 years to 1.75 percent. It warned that the country would enter a recession by the end of 2022 and would last until the end of 2023.
On 27 July, the Federal Reserve (Fed) also increased its key interest rate by 75 basis points. The country’s GDP has fallen for the second quarter in a row, with inflation of over 9 percent.
“Over the next few weeks, given the sentiment of interest rate hikes across expected lines in the future, with the need to give growth a spurt, markets will pay attention to the macro environment and we see strong consolidation at key support prices,” CoinDCX’s research team told Business Standard.
However, some experts remain optimistic about the future of cryptocurrency in India.
“Although cryptocurrency prices have remained steady overall, there seems to be some volatility in the coming weeks,” said Raj A Kapoor, founder and CEO of the India Blockchain Alliance, “I truly believe that crypto will be a net positive in 2022 because any short-term declines driven by interest rate increases will be offset by greater institutional and retail adoption of this asset class.”
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