The downturn in the cryptocurrency market today was driven largely by macroeconomic developments. The Bureau of Labor Statistics released its monthly inflation report, which showed an increase of 8.6% in May, higher than Wall Street consensus estimates. This marked the highest rate in over 40 years. In addition, the collapse of the Terra ecosystem brought fear and uncertainty to the market.
Federal Reserve raising interest rates
If you are a longtime Bitcoin investor, you may have wondered why the price of Bitcoin dropped today despite the Federal Reserve raising interest rates. Recently, the Fed announced plans to raise short-term borrowing rates by 0.75%. While the increased rates are intended to combat inflation, they can also affect risky investments.
Following Powell’s comments, the Dow fell by 1.6% and the S&P 500 dropped by 1.9%. The Nasdaq 100 lost nearly 3%. Bitcoin is closely linked to the stock market. Many investors have begun trading their digital assets in the same way as they trade stocks and tech stocks.
The Federal Reserve is expected to raise interest rates again. The benchmark federal funds rate is expected to be raised by 0.75 percentage points on July 26-27. This is the third rate hike this year. The latest forecast from CME FedWatch shows that the Federal Reserve is likely to raise interest rates another 75 basis points. However, only a minority of FedWatch users anticipate a full percentage point hike. The Federal Reserve is trying to contain inflation, and raising interest rates is a step in the right direction.
Impact of Bitcoin Cash
Bitcoin Cash is a cryptocurrency that is becoming increasingly popular. Many people have speculated about the future of the currency, but the impact of Bitcoin Cash is not yet known. It is a volatile currency that has a long term potential and has seen its price fall and increase in value. Nevertheless, some analysts are cautious about its future. They note that it is still early and may have further downsides. However, Bitcoin Cash offers great potential for future investors.
While Bitcoin Cash’s price has fallen today, the currency is likely to climb again after testing the rising trend channel. It has not yet reached the target of the triangle, but it is still approaching it. It is positioned to test the support level of $130 and could continue its upward trajectory to reach the former all-time high of $7,000. However, it is not expected to rise as fast as the rest of the crypto space. This could result in a worsening of the bear market.
Bitcoin Cash was born out of an argument about scalability, which has plagued Bitcoin for years. While the number of transactions on the blockchain has increased exponentially over time, the size of blocks has not. This has resulted in a slowdown in transaction speed. Many investors have advocated increasing blocksize to facilitate faster transactions.
Impact of Celsius Network freezing withdrawals
The Celsius Network is one of the crypto exchanges that has been struggling for the past year. The crypto exchange has been in trouble for a number of reasons, including a $100 million penalty for securities law violations. In addition to that, it has been hit with cease-and-desist letters from four U.S. states, and has no date to resume service. This is bad news for users of cryptocurrencies, as it could destabilize the market.
The Celsius Network has also faced regulatory pressure for offering unregulated lending to individuals and small businesses. It received a cease-and-desist order in Kentucky last year and is also under pressure in Texas, Alabama and New Jersey. The company said it is taking action to honor its obligations, but investors may be concerned that its actions are not good enough. While Celsius has cleaned up its risk disclosures in recent weeks, it is still in a gray area in terms of regulation. Although it has restricted its Earn product to accredited investors, the company has said it is freezing withdrawals until it can better honor its obligations.
The Celsius Network’s move to freeze withdrawals has spooked the cryptocurrency market. As a decentralized bank, it offers interest rates to depositors, but cannot guarantee payment in the case of a withdrawal rush. As a result, this has caused a severe decline in bitcoin prices.
Impact of El Salvador Day
In today’s market, a few things are likely to have an impact on Bitcoin prices. El Salvador’s president is a strong supporter of Bitcoin, and he’s already purchased a few Bitcoins at lower prices. He’s also retweeted several videos of people using Bitcoin to pay for their food and drinks at Starbucks, Pizza Hut, and McDonald’s. This may be a good thing for bitcoin, but it could lead to a price drop today.
In El Salvador, many people are skeptical of Bitcoin. While many have accepted the technology, others remain wary. El Salvador’s Chivo Wallet, for example, was given to citizens preloaded with $30 worth of Bitcoin. However, some of its users complained that the wallet isn’t reliable, and that it doesn’t work. In a recent interview, Jose Abraham Ceron, a business owner in Santa Tecla, said that his customers still prefer to pay in cash.
Despite the volatility of the cryptocurrency market, El Salvador’s president has encouraged investors to purchase Bitcoin. In a tweet, he emphasized that “150 new Bitcoins were added to the country’s currency today.” Despite the drop in prices today, El Salvador’s president says that his country’s government now has 550 Bitcoins, worth $26.7 million at current prices.