Bitcoin falls below $20,000. Fear dominates
It’s like the chorus of a song.
The cryptocurrency market is once again depressed. Prices are starting to fall again for a fifth session in a row. We are again below a trillion dollars in terms of market capitalization. To be more specific, the market was worth $997 billion at last check, down 1.3% in 24 hours, according to data firm CoinGecko.
This market has thus lost more than 2.1 trillion dollars compared to the record in November of more than 3 trillion dollars. The current bearish trend is symbolized by bitcoin which has lost 8% of its value in the last seven days. The king of cryptocurrencies fell below $20,000, a threshold it had not been below since July 14.
Bitcoin was worth $19,871.15 at last check. It is down 71.2% compared to the record high of $69,044.77 set on November 10 in the midst of cryptomania.
In recent weeks, the most popular of the cryptocurrencies had stabilized slightly above $20,000 and even managed to reach the symbolic threshold of $25,000 on August 15 before pulling back again due to concerns about a monetary tightening by the Federal Reserve .
Risky assets
The equation is simple: cryptocurrencies, which are the public face of the crypto industry, are considered by investors as risky assets in the same way as stock markets and especially technology groups. And as is often the case, risky assets are the first to pay the price when things go wrong. In this case, investors are concerned that an aggressive interest rate hike by the central bank will lead to a hard landing for the economy, otherwise known as a recession. They liquidate or steer clear of assets that are considered unsafe.
Fed Chairman Jerome Powell did not reassure them during his speech on Friday at the traditional Fed symposium in Jackson Hole, Wyoming. The economy will likely need higher prices, over a longer period, to tame the fastest domestic inflation in forty years, Powell said.
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Powell added that higher prices would likely lead to weaker near-term growth and softer labor market conditions, describing it as the “unfortunate cost of reducing inflation.”
“We have to hold on until the job is done,” Powell said of the Fed’s inflation battle. “History shows that the hiring costs of bringing down inflation are likely to increase with delays.”
The merger doesn’t help Ether
Powell added that another “unusually large” rate hike could be appropriate in September, but noted that no decision has been made and the size of the move “will depend on the totality of incoming data and the outlook.”
Powell’s speech even affects altcoins like Ether, which are on the rise.
Ether, which is the native token of the popular Ethereum platform, has fallen 3% to $1,452.24 in the last 24 hours. And yet, Merge, the famous Ethereum software update, which will be done in two phases in September, is seen as a game changer for the crypto industry.
The merger is intended to make blockchain affordable for a large number of people by lowering the prices of transactions and also by attracting environmentally conscious investors because there is going to be a new, much less energy-intensive transaction validation mechanism called proof-of-sate.
Ether is down 70.1% compared to its record high of $4,878.26 set on November 10.
