With Bitcoin tail spinning yet again, fears of a recession are turning investors away from risky assets, especially the crypto market. BTC's price, which has slipped from the crucial $20,000 mark, is at risk of breaking down from a long-term horizontal support area. The world's much favored cryptocurrency is down 58.9% from the year's high of $48,234 on March 28.
Challenging Economic Outlook
Bitcoin had been on a steady rise last week but hit rock bottom, and now its trading at $18,438. It lost 8.13% of its value in the last 24 hours. The crypto market continues to see the impacts of a challenging economic outlook. The US Federal Reserve chairman Jerome Powell stated last week that more interest rate hikes are likely.
The Federal Open Market Committee (FOMC) is set to meet on September 20 and 21. It raised federal fund rates by 25 basis points (bps) in March 2022, 50 bps in May, and 75 in June. Analysts believe there is 82% probability of a 75 bps rate hike and an 18% chance of a 100-bps rate hike. If it happens, the target rate would be increased to 300-325 or 325-350, respectively.
A political economist Benjamin J. Cohen said there is plenty of evidence in the earlier periods of high inflation and FED rate hiking cycles that the bottom will not be in until the FED gets close to the end of their next round of rate cuts, and not rate hikes. Robert Kiyosaki, the author of Rich Dad Poor Dad, believes Fed raising interest rates will destroy the US economy. He said "savers will be the biggest losers", and advised people to invest in REAL MONEY â gold, silver, and Bitcoin.
Bitcoin Tumbling Since Nov 2021
Over the last couple of weeks, Bitcoin has been trading in a relatively tight range of $19,000 - $23,000. The cryptocurrency hasn't fared well since reaching an all-time high price of $69,000 in November 2021. Moreover, it hasn't been above $50,000 since December 25, 2021.
The world's number one cryptocurrency saw a nearly 70% drop in value since its all-time high above $68,000 on November 10, set back by surging inflation, lagging recovery in the job market, and the Fed's push to wind down pandemic measures to support the US economy. It should be noted that Bitcoin entered 2022 on a high note, but has been challenged by macroeconomics, including the geopolitical tensions between Russia and Ukraine.