Bitcoin and Ethereum prices have been dull. That could change this week

The crypto market has been unusually quiet lately, but that doesn’t mean things are going well.

Over the past month, the prices of bitcoin and ethereum have remained low but stable. Bitcoin has mostly stayed in the $19,000 price range while ethereum has mostly stayed in the low $1,300s. That finally changed last week, when bitcoin regained $20,000 after a three-week hiatus and ethereum broke above $1,500 for the first time since mid-September. Despite these gains, both tokens are still about 70% below their all-time highs of last November.

The relative stability of the notoriously volatile crypto market contrasts with a stock market that has been all over the place in recent weeks. But the market could see some fresh volatility this week, as the Federal Reserve meets again to decide whether to raise interest rates further. Experts are predicting another increase of 75 basis points, which could send crypto tumbling. The crypto market has reacted negatively every time the Fed has raised interest rates this year. If the past is any indicator, it will likely happen again this week.

Regardless of what happens to the price this week, some experts are still predicting that prices will get worse in this bear market before they get better.

“Until proven otherwise, I think bitcoin and ethereum will recover about 85%,” said crypto expert Wendy O, founder of CryptoWendyO media. “That puts ethereum around $750 and bitcoin around $10,000. Obviously, those aren’t exact targets. I just think we’re going to have another drop down.”

Here’s what’s happening in the crypto market today and what it means for the future.

How could this week’s Fed meeting affect the crypto market?

It’s a quiet market right now, but that could change this week.

Stubborn inflation continues to drive the Federal Reserve to raise interest rates in an effort to rein in rising prices. It will come with significant “pain points” for the economy, according to Fed Chairman Jerome Powell. And a faltering economy is going to result in investors cutting back on their spending. This is likely to affect bitcoin and ethereum, both of which have reacted negatively to Fed rate hikes over the past year.

Although past interest rate hikes have temporarily driven down the value of crypto, prices have remained relatively stable. Experts believe that is likely due to long-term owners remaining resistant.

“There are certain people who want to hold crypto for the long term,” said Laura Shin, host of the “Unchained” crypto podcast and author of Cryptopians. “Over the last decade, there have been a number of new people who have come into crypto and really believe in it, and so they are probably the ones helping to keep the price stable at these levels.”

So crypto prices may continue to remain stable despite all the economic uncertainty, but there is no guarantee. Macroeconomic factors continue to complicate the US economy.

“The biggest driver of the deflation of the crypto markets over the past year is the macro environment,” Shin said. “Because there is high inflation and because some people think we could see a recession. There are many people who do not want their money in speculative assets. Crypto would fit in that bucket.”

What will happen if more investors cut back and sell their crypto investments? Prices are likely to go down, or at least continue to remain low. But that’s in the short term; we also asked experts where the market might be in two or three years. The short answer: it’s hard to say.

“It’s hard to speculate that far out,” said Wendy O. “And the reason is we don’t know what kind of regulation we’re going to get. Speculating what’s going to happen that far in advance does people a disservice because it might not is hitting what we’re predicting. Bitcoin could come across with ESG regulations or environmental regulations, like all kinds of other things.”

What Should Investors Do With Crypto Right Now?

In short: nothing. Crypto has always been a volatile and risky asset, and as the US economy continues to roll, experts are recommending that you tone down on speculative assets. And no matter what happens to the price, experts recommend that you let your investments sit while the financial situation is resolved.

During this downtime, Shin recommends that people who are truly invested in crypto take the time to learn more about the technology that powers it and to understand the ecosystem from which various coins originate. Blockchain technology is still in its infancy and many expect more applications to come, including more developments on NFTs, web3 and DeFi.

Regardless, experts recommend that you dedicate no more than 3-5% of your investments to crypto, and only invest what you are comfortable losing.