Bitcoin drops below $36000 amid broader market sell-off

Friday, May 6, 2022
author picture Gerald Girard
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Bitcoin Drops Below $36000 amid Broader Market Sell Off

As the price of Bitcoin falls below $36000 in a broader market sell off‚ what can we expect? What is the impact of the Federal Reserve's recent interest rate hike on the price of cryptocurrency? And‚ what should we do if we're already holding crypto assets? We'll explore these questions in this article. But first‚ let's take a look at some other topics‚ such as the potential future of cryptocurrency and its place as a mainstream investment asset.

Bitcoin price drops below $36000 amid broader market sell off

As the stock market continues to slide‚ so do cryptocurrency prices. After all‚ Bitcoin is only a currency‚ not a hedge against inflation. This is particularly pertinent as inflation is at 40-year highs. Bitcoin's price has fallen nearly 26% in one day‚ while its price is still higher than the cost of a pound. Its price could fall to $27‚200‚ or 26% below its current levels. Stocks‚ bonds and cryptocurrencies are also falling. Investors have been panicking as they poured money out of stocks. On Thursday‚ the S & P 500 Index dropped nearly 4.2%‚ while the Nasdaq 100 fell 5.7%. While the S & P 500 has recovered some of its losses‚ the price of Bitcoin remains below its late-2017 highs. However‚ the price may drop even further if the stock market begins to rally again. The latest drop in Bitcoin's price follows a recent spike to $68‚000. The drop is a reaction to President Biden's signing of the $1.2 trillion infrastructure bill‚ which has provisions that could affect crypto investors. However‚ Bitcoin's recent price rebound is still a significant upswing from the low $40‚000 range in September. Thus‚ a dip to this level could be a short-term setback. Despite recent rallies‚ Bitcoin is still struggling to find support in its recent rally. During the last 24 hours‚ it has traded at $36‚000‚ down 18.3% from its peak on October 22nd. As the stock market continues to drop‚ other cryptocurrencies‚ including Ether‚ are also suffering. While Ether fell 8.3% in a single day‚ the overall cryptocurrency market is down eight percent. While this drop is a short-term trend‚ investors should avoid sinking too much of their portfolio into crypto. As always‚ investing in cryptocurrencies requires risk‚ and experts advise that investors should not invest more than they can afford to lose. Instead‚ investors should prioritize other financial priorities such as establishing a cash reserve or paying off high interest debt. If prices fall even further‚ they should consider diversifying their portfolio with a low-cost index fund.

Cryptocurrency's place as a mainstream investment asset

While it's true that investors are watching what the Biden administration's task force will do to regulate the digital currency‚ Bitcoin's price has been falling due to the broader market sell off. As the market has declined‚ some investors are considering other investment opportunities‚ including gold and silver. Others have turned to the dollar as a starting point. Regardless of the reasons for the price decline‚ there are some positive signs for the crypto market. While Bitcoin's price has continued to slide this week‚ other cryptocurrencies‚ including Ether‚ have also weakened sharply. Even though it initially rallied following the Fed's interest rate hike on Wednesday‚ the broader stock market has fallen 8% over the last day. The sharp drop has caused the overall cryptocurrency market to drop about 8.1% in 24 hours. The Fed's rate hike has sent the stock market lower as investors digest the implications of tightening monetary policy. This sell-off has affected cryptocurrency‚ as well. Despite the recent drop‚ the price of crypto has remained relatively stable in recent months. Nelson‚ who mainly invests in low-cost index funds‚ warns prospective investors not to panic. Besides‚ cryptocurrency price swings are typical and it's important to use a buy-and-hold strategy. Although the current low prices may be tempting to buy‚ investors should make sure that they are comfortable with losing the entire investment amount. As always‚ it's best to invest only what you can afford to lose and cover other financial priorities before investing in crypto. The recent volatility in the crypto market is likely caused by a number of factors‚ including geopolitical tensions and concerns about tighter monetary policy by the Fed. Wednesday‚ the Fed delivered its first rate increase in 22 years and signaled more increases are in order. The runoff of the balance sheet will begin in June. In addition to the recent volatility‚ the cryptocurrency market is tracking macroeconomic events more closely than ever. While there are many positive signs for the cryptocurrency market‚ investors should be wary of investing their entire portfolio into it. Although cryptocurrency prices are volatile and may rise substantially in the coming years‚ they should be avoided unless you have sufficient savings and have other financial goals in mind. A long-term view and a balanced portfolio are more important than short-term profits. So‚ be prudent and invest your funds wisely. Despite the volatility‚ the price of Bitcoin has been on a positive path. Experts suggest not to invest more than 5% of your portfolio in the crypto market and limit your losses to what you can afford to lose. Unlike traditional investments‚ cryptocurrency can be a high-risk and unpredictable medium of exchange. While experts are divided on the value of Bitcoin‚ Yang's advice is generally sound. If you're new to the market‚ you should learn as much as you can before making an investment decision.

Impact of Federal Reserve's interest rate hike on cryptocurrency price

One of the biggest questions is: what will be the impact of the Federal Reserve's interest rate hike on the price of cryptocurrency? A substantial hike would presumably tilt the US economy into recession or dampen growth. In any event‚ the rise will likely cause speculators and investors to sell crypto assets. Having dry powder will not prevent a precipitous decline in prices. On the other hand‚ a neutral outcome would not have a huge impact on the price of cryptocurrencies. The US Federal Reserve is widely expected to increase rates over the next several months in a series of 50 basis-point increments‚ with each successive hike addressing inflation. However‚ despite the Fed's intentions‚ crypto will still be largely driven by fundamental factors such as network usage and user growth. Moreover‚ the price of crypto is still subject to a significant amount of risk‚ which is why investors should only invest money that they can afford to lose. Earlier this week‚ the Federal Reserve raised the benchmark interest rate. The federal funds rate is now between 0.75% and 1%. The hike follows the Federal Reserve's move to fight inflation by selling billions of bonds on its balance sheet. Hence‚ the price of cryptocurrency could go up significantly. This move is a catalyst for investors and traders to consider buying cryptocurrency in 2019. With the recent drop in commodities and risky assets‚ crypto prices have responded to this news by increasing in price. The increase in interest rates is a headwind for crypto assets. Raju‚ however‚ predicts an up year for crypto assets in 2022. Higher rates will likely cause a short decline but it will be largely offset by greater institutional adoption of crypto assets. However‚ it is important to note that the rise in commodity prices could complicate this further. The federal funds rate is likely to increase a half percentage point next Wednesday. The Fed is trying to battle soaring inflation. While this isn't the rate consumers pay‚ it will affect the interest rates for credit cards‚ loans‚ and mortgages. While a rise in the federal funds rate doesn't directly affect the price of cryptocurrency‚ it may have an effect on the price of other assets in the market.