Since this weekend, the cryptocurrency market has been experiencing new turbulence. Bitcoin fell below the symbolic threshold of $20,000 on Friday.
The world of cryptocurrencies is still far from escaping volatility: it is back to a phase of strong downtrend on major cryptos, with bitcoin and ether in the lead.
At the end of the day on Friday, the queen of cryptocurrencies fell below the symbolic cap of 20,000 dollars. It is trading around 19,800 dollars at 9:30 am on Monday morning. The last time it happened was in mid-June, in the middle of the second crypto crash, bitcoin had fallen below $18,000. So there, be careful, it can happen very quickly.
On ether, we are now at the end of July levels around 1,400 dollars, the cryptocurrency having lost almost 3% of its value since Sunday. But where does this new slack in the ecosystem come from?
Typically, we are in this kind of market phase where everything is linked, that is to say that already bitcoin and ether are increasingly linked to the Nasdaq, during high-tech companies, since the Investors are exposed to it in one way or another through their investments in Teslas, Coinbases, and a whole host of other companies that themselves have significant crypto exposure.
The Fed tightens the screw
Not to mention that the process of monetary normalization that Jerome Powell, the chairman of the Federal Reserve (Fed), detailed in Jackson Hole on Friday is bound to last for a while. He thus hinted that the US central bank was going to continue its monetary tightening policy to deal with inflation. As a result, the Nasdaq fell almost 4% on Friday, signing its worst session since mid-June. So inevitably, the cryptocurrency market has also fallen.
Moreover, the other effect that affects the market is obviously the strength of the dollar, which will only increase thanks to the powerful “rate effect”… The American curve is only tightening and that is less power for cryptocurrencies. Likewise, a strong dollar means that energy prices are very high for a long time to come, whatever happens: oil, gas and coal on the international markets are paid for in dollars and the Energy cost is the major parameter to take into account for cryptocurrency mining.
All of these elements risk prolonging the crypto winter we are experiencing.