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Crypto, Bitcoin, bear market: How is the course developing?

 


The entire crypto market including Bitcoin has reached its lowest level since December 2020. With the current price, we have arrived in the middle of the bear market! But you don't have to despair, we are here for you.


You want to know how crypto and bitcoin develop in the long and short term? Where is the price going? We have taken on the task and will go through all the important factors for you: from  fundamental data to Fibonacci support  - from block to chain.


Bitcoin Price Reaches $20,000 – Can You See a Long-Term Trend?

After a two-day meeting yesterday, the US Federal Reserve decided to raise interest rates by 0.75 percentage points. In doing so, it raises the interest rate to a range of 1.5 to 1.75%, the highest increase since 1994!


An increase means  investors have less capital to invest . Overall, less money flows into risky assets such as crypto or bitcoin or tech stocks. Bitcoin usually sets the direction for the entire crypto market.


Above all, the FED has made price stability and full employment its mandate – a target of 2% inflation is the aim.


The European Central Bank (ECB), in the form of its President Christin Lagarde, also indicated that it wanted to raise the key interest rate in Europe. In a letter published on May 23, Ms. Lagarde suggests that this will help fight inflation.


"Based on the current outlook, we will likely be able to exit negative interest rates by the end of the third quarter."


The fact that the ECB finds itself in a quandary is self-made: on the one hand, we have devastating inflation of 8.1% in the euro zone, on the other hand, member states from the south are heavily indebted. If the ECB raises interest rates too much, there is a risk of national bankruptcy for some countries; if the ECB does not raise interest rates, there is a risk of even worse inflation. Inflation, which is at the expense of all of our prosperity.


After the ECB reinterpreted the goal of price stability to 2% annual inflation, it is acting more hesitantly than the FED. A real will to fight inflation is not shown, instead it is promised to give the over-indebted countries even more support. Government bond purchases are said to affect Italy, Greece, etc. in particular.


One thing above all: insecurity. Investors don't really know what to do with their money. Gold, stocks and also crypto have been experiencing a complete sell-off for several months. Bitcoin is 67%, the S&P 500 20% and gold 10% below their respective all-time highs.


Financial assets are not going up, but oil, gas and food are. Using the “commodity” wheat, for example, consumers can see how much the price has risen. In summary, everything is becoming more expensive, people withdraw their money from all investments in order to be able to afford the basics. Why isn't the government doing anything about it?


The FED is at least trying, but the ECB is not. However, what the FED is accepting is nothing less than a recession. By raising interest rates too much, the central bankers run the risk of slowing down the economy too much. GDP in the first quarter of 2022 already suffered a decline of 0.3% - the second quarter will not be any better due to the rising key interest rates.

Crypto assets should do well with this development, at least in the long term. With the two central banks keeping interest rates low in the long-term trend, we are heading towards a period of money abundance – crypto should benefit. Low interest rates mean more capital, and more capital means more demand for risky assets.


Disclaimer

All information contained on our website has been researched to the best of our knowledge and belief. The journalistic contributions are for general information purposes only. Any action that the reader takes based on the information found on our website is entirely at their own risk.

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