‘Like Coming Off Heroin’: How Bad Will This Bitcoin Bear Market Get? – Decrypt

Crypto Winter is no longer coming – it is here. a bear market. But how bad would it be, and for how long? Well, according to analysts who talked decryptThe worst is yet to come.

The real issue now is inflation, which is growing up in america (and everywhere), and which the Federal Reserve wants to bring under control by raising interest rates.

Last week, the central bank increased Rates increased by 0.75%, the biggest increase since 1994. Fed officials said further growth is likely later this year. Higher interest rates make it harder to borrow money, which means fewer investors are willing to bet on assets with more perceived risk, such as stocks or cryptocurrencies.

Bitcoin, which is considered by many to be “risky”, is falling along with equities. Right now, the largest cryptocurrency by market cap is trading at $20,333.59, according to CoinMarketCap. The current relationship with traditional markets makes this crypto bear market different from the 2018 crash.

Bloomberg Intelligence analyst Eric Balchunas told decrypt That the Federal Reserve would be less likely to step in and lower interest rates — as it has done in the past — to help if things go awry.

“The reason it’s different is that the Fed is serious this time,” said Balchunas., “Every previous sell-off was the idea that the Fed would step in if the market really needed it, and this time they’re not going to do it.

“And the reason for that is inflation – it’s a major issue in elections. Normally, they [the Fed] Cares, but they have one big issue and that’s the swamp. The markets will have to learn to live without the Fed, and that’s going to be painful. It’s like coming off heroin – the first year is going to be tough. ,

Ouch. Want some stats? Scott Norris, co-founder of private US-based bitcoin miner LSJ Ops, said he believes bitcoin could still drop to $11,000. over the weekend, it fell down $20,000, an important support level, fell over 70% from its all-time high in November.

“The Fed has been extremely slow to move on inflation or even fully acknowledge its existence,” he said. “Many adults have never been through a bank before, and now this is happening in crypto and equities before.

“Maximum pain is coming but it hasn’t been hit yet – this time the governments of the world are not granting bailouts, just bills, while they maintain their level of spending. America could leave the recession altogether And at first one can just dive headlong into depression.”

Julio Moreno, macro on-chain senior analyst at Cryptoquant, an analytics firm, was a little less pessimistic. decrypt Bitcoin may drop to around $16,000 in an interview.

“In March 2020, it [the crash] Didn’t last long as the Fed aggressively provided liquidity because of the pandemic,” Moreno said. “This time, it’s doing the exact opposite.”

Trader and analyst Alex Krueger suggests the Fed will likely stay in place through 2022, pushing asset prices even lower decrypt, He added that the S&P could be down around 10% to 15% from current levels in the second half of the year, similarly tracking bitcoin.

“It’s all about inflation and the Fed, even for crypto,” Kruger said.

And as far as Ethereum is concerned, the second largest digital asset by market cap, and which has helped make crypto more mainstream as the digital fuel powering NFTs, things are not much better. (As of this writing, it had risen to a little over $1,100.)

Lucas Outumuro, head of research at IntoTheBlock, told decrypt That although bitcoin and ethereum operate differently to traditional tech companies, they are performing like said tech stocks “possibly due to a crossroads between the types of investors who hold these assets.”

“I expect these conditions to continue pushing prices down until macro uncertainty subsides,” he said.

During the last crypto winter, in 2017, bitcoin fell from $19,497 on December 15 to $13,831 just six days later. The pain didn’t stop there: it continued to drop throughout 2018, just a year later, it was priced below $3,300.

This Crypto Winter, Analysts Tell decryptCould be even cooler.

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