Bitcoin has stopped plunging and is stabilizing in the $35,000 range, but Bitcoin has plunged 19% over the past week.
This is the worst weekly plunge since China banned cryptocurrency (virtual currency) transactions and mining in May 2021.
Bitcoin plunged because the U.S. Fed entered a full-fledged rate hike mode.
Cryptocurrencies such as Bitcoin have been rallying over the past two years thanks to global ultra-low interest rates. Cryptocurrencies such as Bitcoin soared day after day as liquidity became abundant due to global ultra-low interest rates.
However, as inflation intensifies, with U.S. inflation soaring to its highest level in 40 years, central banks in each country are entering a rate hike mode one after another. The era of ultra-low interest rates is coming to an end.
As a result, the sale of cryptocurrencies such as Bitcoin, a risky asset, seems to be in full swing in terms of “risk hedge.”
Meanwhile, after the Fed’s January Open Market Committee (FOMC) scheduled for this week, some predict that Bitcoin may fall below $30,000.
Yahoo Finance said on the 23rd (local time) that Bitcoin is likely to fall below $30,000 if hawkish (tightening) measures are taken at the FOMC meeting.
As of the 24th, Bitcoin is traded at around $35,000.
The FOMC released a statement at 2 p.m. on the 26th, and 30 minutes later, Fed Chairman Jerome Powell will hold a press conference. Last month, the Fed said at the FOMC that tapering (reduction of bond purchases) could end in March this year and raise the benchmark interest rate three times. However, consumer prices since the FOMC have soared to their highest level in 40 years, raising calls for the Fed to tighten more aggressively.
Most market experts believe that the Fed will raise its key interest rate by 0.25%P at the FOMC meeting in March. Some even predict that the rate hike could be raised by 0.5%P in March or that the FOMC could raise interest rates in January.
