The collapse of the crypto market started from the Feds and its fight against inflation. The announcement to raise interest rates caused a panic that created doubt in the minds of crypto investors. As the Federal Reserve implemented the plan, the overall financial markets, including crypto, fell.
Another factor that helped depress crypto prices was the collapse of Terra Luna USDT. The algorithmic stablecoin decoupled, leading to massive losses that plunged the market into oblivion. Since then, crypto prices have fluctuated in an excruciatingly long crypto winter.
Related Reading: Serum (SRM) Price Looks Set After Hibernation, Could Price Go To $1?
Cryptos like Bitcoin and Ethereum have lost their massive profits, and many crypto projects have completely disappeared.
But the summer was not good either
Some analysts considered a price rally as the market lamented the ongoing crypto winter. But unfortunately, these predictions seem to be delayed as the crypto market experiences more volatility.
For example, Bitcoin has lost more than 37% since the market trend. June 2022 brought many price crashes for the coin like never before recorded. The next month July saw a slight increase of 17% btc price, but that rally was short-lived. The coin has lost everything and is now trading below the $20 mark.
Bitcoin dived even deeper on September 7 when the price dropped below $19K; it quickly recovered. So what is the way forward for the number one crypto?
Analyst suggests solution for BTC recovery
While the investors await a price rally for Bitcoin and others, an analyst indicated that such an event depends on the Federal Reserve.
Dan Nathan, the head of RiskReversal Advisors said this during the popular CNBC’s “Fast Money” episode. According to Nathan, Bitcoin can only reverse to a bullish trend if the Feds change their stance on the inflation-fighting approach.
Recall that in the last annual meeting of the Federal Reserve Board held on August 26, 2022, Jerome H Powell made a speech that caused concern for investors. The Fed’s chairman declared a more aggressive approach in the agency’s fight against inflation.
Before the meeting, Neel Kashkari suggested that the Vokker approach. Since Kashkari was initially dovish in his stance, the crypto community became concerned. Powell compounded the panic when he announced that the agency would tighten its strategies. So, the likelihood that the Feds will pivot in its approach is far-fetched.
To say that this spell has affected crypto prices is an understatement. Many coins started a downtrend from that day and are still doing so until now. The short-lived rallies are no match for the regular retreats.
Related reading: On-chain data shows Bitcoin whale plunging behind dip below $19k
Bitcoin dominance has dropped to its lowest ever. Nathan even said that the coin currently trades like a common stock. So, a rally for the number one crypto may not be possible this 2022 as the Fed is not about to turn.
Featured image from Pixabay and chart from TradingView.com