Fed Tightening, A Major Blow For The BIG 4 (BTC, ETH, XRP, LTC) And Others.
Swings or volatility in the world of cryptocurrency is an unavoidable incident since cryptocurrency is an exchange that holds a purchasing power, and the value is undoubtedly affected by a variety of things which I tagged “turbulence”. The month of February and March has not been a handsome one for the cryptocurrency world, series of biffs troubles the market, plaguing the value of the altcoins.
The turbulence in February was said to have come from various angles, with the pokes being attached to causes like, regulation, ban, heist, and more, leaving investors with lesser tranquility on the potency of cryptocurrencies, and all that could be done which they regarded as the needful is to monitor the crypto market with the hope of getting newsflash like an appealing increment in the value of altcoin which will eventually put them amused and keep their mind at bay.
A recent survey done amongst 1000 Americans has proved that majority of the crypto enthusiast are the millennials. The survey disclosed that 9.19% of Millennials (18-34) would invest their $10,000 in cryptocurrencies, 4.04% of Generation Xers (35-54) while only 3.08% of Baby Boomers (55+) would invest their $10, 000.
The small number of over 35 investors is due to their confidence level in cryptocurrency with is based on their belief that they could lose their toil earned wealth within a twinkle of an eye to the market volatility of the currency. The Xers and Baby Boomers derive more tranquility investing in “tangible commodities and assets”.
62 years old American business executive, Jamie Dimon labeled digital currencies a “fraud,” and a “tulip bulb,” while another 62 years old American business magnate, William Henry Bill Gates in a Reddit post said, “the main feature of cryptocurrencies is their anonymity. I don’t think this is a good thing,” adding that Cryptocurrency “causes death in a fairly direct way”.
Contrarily, the millennials are ready to place their bet on the digital currencies, in the belief that the volatility could make them acquire sudden wealth.
One significant thing I have noticed over time is that, in the crypto verse, there is an interdependent relationship between the values of altcoin especially when one of the big coins is poked the others must be affected, especially when the biff is caused by an external factor.
Towards the end of last week, the recent downslide in Bitcoin’s value which most other altcoins also experienced has ushered variety of side talks and views from users, trader, analyst, and observers.
“There is more to it than bitcoin just selling off because of government regulation or being upset about things.
“Bitcoin is trending with the US dollar, for whatever reason that is.
“As the dollar has weakened, we’ve seen bitcoin weaken as well, I think we’ve seen that trend continue,” the CNBC contributor added.
How Fed Tightening Is Affecting The Big 4
In the same direction with Brian Stutland, a Bitcoin Expert, Mr. Mike McGlone said Bitcoin’s value, drifts along with fiscal policy.
“Since the history of bitcoin, as you can see if we go back a little bit on the chart, here we had a Fed tightening, bitcoin dropped down to below $1000.
“And we go back here and we head to June, we had another tightening and bitcoin drops again. So there’s a correlation there.
“Bitcoin has a tendency to peak with Fed tightening.”
The Bloomberg analyst, while speaking added that Fed tightening is a major “negative factor” that affects the price of the cryptocurrency as the government is reducing the supply of dollar in the market and increasing the interest rate on dollar.
“So, to me, that’s part of the key reason it is reverting and it goes down in Fed tightening.
“Since the last tightening, it has dropped 50 percent.”
Truly, Bitcoin and Litecoin had their all team peak in December, with Bitcoin trading at about 19,500 against dollar and Litecoin was traded around $356, at the same time, Ethereum and Ripple experienced their highest ever known value in January as Ethereum was weighed against dollar at about $1,300 and Ripple was priced $3.
Source: Cryptocurrency Chart.
While the last Fed tightening by the U.S government began around March 2018., the 4 trailblazers have dropped value since then, as Bitcoin, Ethereum, Ripple, and Litecoin are now priced around $7500, $400, $0.543, $122 respectively, depicting a decrease of about 38%, 29.5%, 15.7%, 34.2% separately.
Truly musing over McGlones’s analysis, one would believe that the recent drop in the value of the big 4 is oblique towards the Fed tightening.