Experts warn Bitcoin price could crash to $12k
Some experts have warned that Bitcoin could experience a new low, sending its price down to $12,000. A number of macroeconomic events, such as the increase in the Federal Reserve rate and inflation data, have played a significant role in predicting the price of Bitcoin. The prediction has come at a time when the crypto market is in the red and the top cryptocurrency has lost about 60% of its value since its all-time high. At the time of writing, Bitcoin is trading at $18,992, down 6% from last week.
Important takeaways
- Crypto experts have predicted a massive crypto crash is coming.
- The Federal Reserve’s decision on interest rates will play an important role in determining the flagship cryptocurrency’s price.
- At the time of writing, Bitcoin is trading below $20k.
The Effect of Federal Reserve Interest Rates on Bitcoin
The Federal Reserve has started its two-day meeting on September 20, and it is expected that on September 21 it will raise interest rates again by three quarters. If this happens, it will be the third hike in a row. A recent report by Goldman Sachs economists led by Jan Hatzius also predicts that rate hikes by the Federal Reserve may accelerate faster than expected.
Amid macroeconomic chaos, a pseudonymous crypto expert, Doctor Profit, has warned that the Fed’s decision will bring a bloodbath to the crypto market. He tweeted, ”Please consider the FED’s next decisions. 0.75 [rate hike] already priced in, 1bps and we see blood.” He wrote that Bitcoin has entered the bottom phase at today’s level. He also posted a price-performance comparison between 2012-2016 and 2020-2022.
Twitter: Doctoral merit
Another prominent crypto analyst Justin Bennett said that a bearish trend has been forming in Bitcoin since May when the crypto crash began. He has predicted that Bitcoin is about to see a sharp decline that will pull the price of the flagship currency back to previous bear market lows in 2018, meaning it could fall to $12,000.
Bitcoin works like a stock
Bitcoin is often treated as a good hedge against inflation. That means inflation does not affect the top cryptocurrency. That may not always be the case, as inflation data has affected Bitcoin’s price this year. That is why there has been a historical connection between the stock market and cryptocurrency volatility. A recent report claims that Bitcoin and S&P 500 contracts have a 60-day correlation coefficient of 0.72, just below a record set in May. The correlation coefficient measures the strength of the linear relationship between two assets.
The bottom line
It was a positive feeling that after the Ethereum Merge, Bitcoin and the entire crypto market could recover a bit. However, nothing of the sort happened. Although the merger was completed without a hitch, the crypto market did not reciprocate. Currently, Bitcoin functions like a stock, and the Fed’s interest rate decisions will play a crucial role in determining the fate of the top cryptocurrency and thus the entire crypto market.
