US Fed Policy Poses Huge Risk For Bitcoin, Experts Say

FED Bitcoin

Since the end of 2021, the cryptocurrency market has been in a downward period that worries many, in addition, there is a trend that has bothered even more: the direct correlation with the traditional financial market. With this, the recent policies of the United States central bank (Fed) have been pointed out as a risk for the Bitcoin market by different experts.

A recent speech by Fed Chairman Jerome Powell once again had a major impact on cryptocurrency markets. Over the past week, Bitcoin (BTC) largely rallied after the release of positive inflation data. While Bitcoin topped $25,000 again, Ethereum caused a lot of buzz in the market due to “The Merge” update and the hope of Ethereum 2.0.

However, the upward momentum was short-lived, as has been customary in the sector in recent months.

Relationship with the traditional market

A few days later, Powell again spoke publicly about the Fed’s policies, saying that the office has now taken a harder line, indicating that current monetary policy will continue on interest rates.

As a direct result of the pronouncement, Bitcoin lost around 6% of its value in a recent correction. The digital currency is currently trading at $20,194.

Ethereum also lost 10% in price following the Fed’s announcements. The loss of ETH’s critical support level of $1,500 has raised concerns, at the moment the coin has managed to recover slightly and is above $1,500, but not much safety. to stay there for a long time.

The recent move worries some as it shows that cryptocurrencies have relied almost entirely on inflation-indexed data and the Fed’s monetary policy, something that does not sit well with the idea of ​​a decentralized market designed to go against the current.

Experts say the trend could continue

Bitcoin’s decline is closely related to the movement of the S&P500 index, which also fell more than 3% during the same period.

With that in mind, experts say the Fed’s policies will stick around for a while longer. Experts said that Powell’s monetary policy will continue until inflation reaches the level desired by the government and that, consequently, could mean that the crypto market will remain at risk.

Powell’s 10-minute speech wiped out almost a trillion dollars from the stock and crypto markets.

This creates a complicated controversy for the crypto market that, more than ever, seems to be associated with what it has sworn to destroy.