Expert: “Bitcoin, Ether have a bad start into the year 2022”

The prices of Bitcoin, Ether and other cryptocurrencies have skyrocketed in the past two years. According to experts, however, the crypto world could be more difficult to enter in 2022.

According to CoinMarketCap data on the night of January 10th (Vietnam time), Bitcoin price temporarily fell below the threshold $ 40,000/ coin still $ 39,796/Copper. From 10:30 p.m. the exchange rate recovered somewhat $ 40,832/ coin, but still slumped 1.52% compared to 24 hours ago.

Bitcoin’s market capitalization is shrinking 770 Billion USD. So compared to the peak $ 68,789/ coin was launched on November 10th. founded, Bitcoin has lost more than 40% in price.

The price of ether – the second largest cryptocurrency in the world – also collapsed and eventually lost the mark 3,000 USD/Copper. In the last 7 days, the price of Ether has fallen by up to 21%.

Other cryptocurrencies are also in the red. Total crypto market cap fell 2.49% from 24 hours earlier 1,890 Billion USD.

Bitcoin price suddenly plummeted below USD 40,000 / dong on January 10th. Photo: CoinMarketCap.

Persistent downward trend

“The cryptocurrency market continues to collapse after it became known that the US Federal Reserve (FED) will tighten monetary policy,” commented financial expert Craig Erlam (based in London).

“If monetary easing has been one of the main ‘catalysts’ helping the Bitcoin boom in the past two years, then the crypto world could enter a more difficult year 2022. From central banks. Central banks around the world , including the Fed, are moving into tightening mode, “argued Erlam.

Edward Moya – an expert at the financial advisory firm Oanda (based in the USA) – also believes that the crypto world is off to a pretty bad start in 2022.

“One reason for this is that investors are starting to diversify their portfolios into other products like NFTs (non-fungible tokens). Along with this, there is a risk that the Fed will raise interest rates and reduce its investments. Balance sheet. ”Explained Mr. Moya.

In particular, according to the minutes of the Fed’s monetary policy meeting on May 14-15. December 2021, some Fed officials believe it is time to tighten the portfolio. 8,800 Billion USD, including bonds and other assets.

These officials said the downsizing of the balance sheet should come soon after the Fed began to hike rates.

The minutes of the meeting emphasized that interest rates should be raised “earlier than previously planned”.

Goldman Sachs predicts the Fed could hike rates four times this year and start slashing its balance sheet from July.

“The rapid recovery of the US labor market and the hard signals from the minutes of the Fed’s monetary policy meeting both suggest that monetary policy will soon be normalized,” said Jan Hatzius, an expert at Goldman Sachs.

“So we are accelerating our forecast of when the Fed will cut its balance sheet from December to July,” he said.

The Wall Street investment bank also believes the Fed will hike rates in March, June, September and December. Observers say this could have a negative impact on Bitcoin and other risky assets.

Bitcoin proponents have called the cryptocurrency “digital gold” and benefited from the volatility. However, observers note a growing similarity between the price movements of Bitcoin and stocks.

“I own gold to hedge against the effects of inflation and a safe haven to cover portfolio losses. Bitcoin’s role, on the other hand, is purely speculative,” said investor Edmund C. Moy.

Great pressure in the short term

According to financial expert Craig Erlam after falling below the threshold $ 40,000/ coin, the largest cryptocurrency in the world, will see another sharp decline.

“Bitcoin’s case could get worse after the price of ether fell 3,000 USD/ dong, “said Oanda company’s financial expert Moya.

According to him, the price of ether has come under severe pressure after founder Vitalik Buterin admitted that ether in its current form may not be ready for mass adoption.

“The prospects for the two largest cryptocurrencies in the world remain very good. But Bitcoin and Ether will come under heavy pressure in the short term, ”warned Moya.

Bitcoin price also slumped after Kazakhstan’s President Kassym-Jomart Tokayev ordered the country’s telecommunications service provider to shut down internet service.

Bitcoin’s price movement over the past year. Photo: CoinMarketCap.

According to the Cambridge Center for Alternative Finance, Kazakhstan ranks second after the US in terms of global bitcoin mining market share with 18.1% market share.

Many Bitcoin miners left China for neighboring Kazakhstan after the Chinese authorities tightened controls on the mining and trading of cryptocurrencies.

In early 2021, Bitcoin price crashed from a record level after the Beijing government introduced a ban on mining and trading activities in cryptocurrencies. However, the coin can still return to the top and set a new record nearby $ 69,000/ dong in November 2021.