Bear Market, Bear Market Again, and Lastly Bear Market
Looks like a crypto winter isn't coming after all, it's already here! But many questions still loom. How bad will it get? When will it be over?
For now, it looks like the pressing issue has been inflation and getting that under control. As a result, we can continue to expect the interest to borrow money to increase. Last week, the Federal Reserve raised interest rates by 75 basis points or 0.75%. This is the single largest raise since 1994. Talk about one upping each other.
It won't stop there, as Fed officials hinted at further raises as it tries to slow down inflation. Higher interest rates make it more expensive to borrow money therefore affecting riskier assets like crypto. In fact, ever since the interest rates were flaunted the crypto market has reacted negatively. Bitcoin, the largest and most popular cryptocurrency by market cap, is currently trading at $20,000. That still quite high but way below from its all time high of $69,000 this time last year.
While inflation continues to persist, the fed will remain hawkish in its policies. This time around is different and we shouldn't expect to the feds to jump in and bail out failing companies. The reason why is inflation. They much rather feel the detoxicating affects of it than rescue the market.
In the last crypto winter, Bitcoin fell from around $19k to around $13k in a matter of days. This time around it could be worse and it could be longer. Only time will tell.
Unstoppable Force meets an Immovable Object
It's that daily segment again. Featuring on one side is our unstoppable force Dogecoin. On the other, its hype king, Elon Musk. It has been reported that Elon Musk will begin to accept Dogecoin as a payment option for Space X merchandise.
This comes after the coin has lost over 90% of its value from its all time high in May of 2021. Nevertheless, the Space X and Telsa CEO reiterated his support for the crypto being quoted saying " I’m responding to those people and just people that, when I’ve walked around the factory at SpaceX or Tesla, they’ve asked me to support Dogecoin, so I’m doing so".
He has already allowed Tesla to accept Dogecoin for some merchandise and this move could prompt further utility and excitement for the coin. After this decision the coin jumped 13%.
Musk has also made comments in support of the popular memecoin even tweeting out his support.
Going, Going, Gone!
Inflation is well on its way and it hasn't been anything short of the "transitory predictions" that were made. In fact, with record gas prices and grocery items rising to record highs, we can only sit back and wonder what can be done to ammend this. One possible solution is another raise hike by the Federal Reserve. After having raise the interest rates by 75 basis points, the Fed is considering raising the rates again in September.
According to its own prediction, inflation will remain above 2% well into 2025. Despite the Fed Chair saying that they were not trying to bring about a recession many have called for one.
Latest polls show support for more interest rate hikes despite the repercussions that it may have. Most expect the central bank to hike its policy rate by another 50 basis points in September, with opinions more divided over whether it will hike by 25 or 50 basis points in November. It is expected that the Fed will raise its rate by 25 basis points at its December meeting, according to a majority.
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