There have been massive corrections in the prices of cryptocurrencies in the past two months. The market capitalization of all cryptocurrencies is now $896.65 billion, down from a peak of $3 trillion in November 2021.
A weak global economy, growing inflation, and interest rate hikes have triggered a significant sell-off in the cryptocurrency markets. The future of the cryptocurrency markets is currently uncertain for traders and investors. Different bitcoin industry experts have varying perspectives on this matter.
According to Dileep Seinberg, the founder and CEO of MuffinPay, a utility token, and bill payment service, crypto will probably increase again. He predicted that the crypto winter ought to be over by August 2022. He also said Bitcoin might hit an all-time high of $70,000 by the end of the year or in January 2023.
Apart from geopolitical instability, there aren’t many compelling reasons for crypto to be accepted for what it is and what it can do. He anticipated that government regulations would become a significant force later in the year.
The correlation between the financial markets and cryptocurrencies is growing. Unfavourable news from all around the world has had an impact on both the global financial markets and the cryptocurrency market. A looming economic crisis could make cryptocurrency markets even more volatile.
Due to the interdependence of the equity and cryptocurrency markets, the crypto markets are negatively impacted by macroeconomic factors such as inflation (which has reached decade-high levels) and rising commodity prices. The sharp quantitative tightening used by the US Federal Reserve to combat inflation will aggravate the current decline in cryptocurrency prices.
According to Sharat Chandra, VP, Research and Strategy at blockchain-based identity management platform EarthID, the US money supply has been growing at a rate of 18%, which is three times the growth rate. As a result, inflation will continue for a few more years and won’t disappear anytime soon.
He added that the Fed must strike a perfect balance between reducing inflation and avoiding stagflation. If the Fed keeps hiking interest rates, a recession that devastates the equity and cryptocurrency markets is imminent. The fragility of the cryptocurrency markets and the apprehension of investors will persist.
Many individuals are concerned about the rise in interest rates in major crypto-producing countries because it reduces liquidity. Both indicators have sparked a massive sell-off.
If you would like to read more news articles like this, visit DeFi Planet and follow us on Twitter, LinkedIn, Facebook, and Instagram.
“Take control of your crypto portfolio with MARKETS PRO, DeFi Planet’s suite of analytics tools.”
