U.S. Dollar Skyrockets, Bitcoin, Ethereum Plummet
Bitcoin prices fall below $20,000 for the first time since the start of July. It has continued to slip, with prices falling by another 1% in the last 24 hours. It s currently trading at $19.8K.
Ethereum has shown an even stronger decline, falling by over 3% in the last 24 hours and close to 6% in the last 7 days. It is currently trading at $1,447.
The decline of crypto prices can be attributed to the dollar’s continued show of strength in the market. Bloomberg’s Dollar spot index is up by close to 7 points, as people stack dollars to protect themselves from volatility. The U.S. Dollar Index has hit a 20 year high of 109.45.
How Bitcoin Lost All Its Strength
The crypto market is currently under two opposite macroeconomic forces. Since the start of 2020, the crypto market has been strongly correlated to the traditional market, especially to tech stocks and NASDAQ. Therefore, it has been increasingly affected by macroeconomic factors.
On the one hand, Bitcoin showed strength based on favorable inflation data. BTC prices crossed $24K after the CPI for August showed cooling inflation. The recently released Personal Consumption Expenditure Index also reinforced BTC’s position.
On the hand, Bitcoin and the rest of the crypto market have been adversely affected by the Fed’s quantitative tightening and interest rate hike. Fed chair Jerome Powell’s speech during the Jackson Hole symposium badly affected the entire market. Powell promised further pain for households and businesses in his effort to bring down inflation to below 2%.
The Fed also has made clear that it will make every effort to strengthen the dollar’s value as it can curb the effects of inflation.
When Can Bitcoin Bounce Back
Bob Loukas, an expert trader and influencer, took to Twitter to reveal that the 4-year bear cycle remains the dominant trend for Bitcoin. He believes that it can still months for Bitcoin to resin its strength.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.