What Bitcoin needs to regain its higher grades, an analyst explained
The crypto market crash started from the Fed and its fight against inflation. The announcement to raise interest rates caused a panic that created doubt in the minds of crypto investors. When the Federal Reserve implemented the plan, the overall financial markets, including crypto, plunged.
Another factor that helped push crypto prices down was the crash of Terra Luna USDT. The algorithmic stablecoin was depegged, leading to massive losses that plunged the market into oblivion. Since then, crypto prices have fluctuated in a terribly prolonged crypto winter.
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Cryptos like Bitcoin and Ethereum lost their huge gains and many crypto projects disappeared completely.
But the summer hasn’t been good either
Some analysts believed a price rally as the market bemoaned the continued crypto winter. But unfortunately, these predictions seem to be delayed as the crypto market registers more fluctuations.
For example, Bitcoin has lost more than 37% since the market downturn. June 2022 brought many price crashes for the coin never recorded before. The next month, July, saw a slight increase of 17% i btc price, but that rally was short-lived. The coin lost everything and is now trading below the $20 mark.
Bitcoin even dived deeper on September 7 when its price plunged below $19K; it recovered quickly. So what’s the way forward for the number one crypto?
Analyst indicates a solution to BTC recovery
As investors await a price rally for Bitcoin and others, one analyst has indicated that such an occurrence depends on the Federal Reserve.
Dan Nathan, RiskReversal Advisors principal stated this during the popular CNBC’s “Fast Money” episode. According to Nathan, Bitcoin can only turn to a bullish trend if the Feds change their stance on the fight against inflation.
Recall that at the last annual meeting of the Federal Reserve held on August 26, 2022, Jerome H Powell gave a speech that caused concern for investors. The Fed chief declared a more aggressive approach in the agency’s fight against inflation.
Before the meeting, Neel suggested Kashkari use Vokcker approach. Given that Kashkari was initially dovish in his stance, the crypto community became concerned. Powell added to the panic when he announced that the agency would intensify its strategies. So the likelihood that the federal government will swing its approach is remote.
To say that these plays affected crypto prices is an understatement. Many coins started a downtrend from that day and are still on it until now. The short-lived rallies are no match for the frequent pullbacks.
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Bitcoin dominance has fallen to an all-time low. Nathan even stated that the coin is currently trading like a common stock. So, a rally for the number one crypto may not be possible in 2022, given that the Feds are not about to budge.
Featured image from Pixabay and chart from TradingView.com
