Despite the announcements of the Fed and the ECB, the crypto market capitalization is optimistic about the price of BTC and ETH. Jerome Powell announced another interest rate hike of 75 basis points, commenting that cryptocurrencies not issued by banks are bad for storing value.
In November 2021, Bitcoin (BTC), Ether (ETH), and Binance Coin (BNB) led crypto market capitalization to reach USD 3 billion. At the time, the pioneering cryptocurrency almost hit USD 70,000, but the subsequent bearish cycle lasted for months.
The current capitalization of the overall crypto market is moving below the trillion US dollars. Most leading cryptocurrencies have recovered following the previous bearish days that threatened to take them to yearly lows.
According to CoinMarketCap, the crypto market capitalization recently increased by nearly 4.57% to around USD 978 billion.
Meanwhile, the dominance of Bitcoin moves around 37%, and the overall crypto market trading volume over the last 24 hours stands at USD 69 billion.
Despite the announcements of the US Federal Reserve (Fed) and the European Central Bank (ECB), the crypto market capitalization is optimistic. While BTC seems to consolidate around USD 19,000, ETH does it at around USD 1,600.
Since the Merge, the upgrade to Ethereum 2.0, is behind the above optimism, there might be corrections due to the decreasing FOMO.
The Fed Announces the Imminent Regulation of Cryptocurrencies
Jerome Powell, the chairman of the Fed, recently announced another interest rate hike of 75 basis points. In addition, he commented that cryptocurrencies not issued by banks do not serve to store value, among other alleged weaknesses.
The official stated that they want to be in favor of crypto assets but need to create an appropriate regulation.
Powell also said the American central bank would not abandon its efforts to curb inflation. In that regard, he said they needed to continue acting frankly and forcefully.
The European Central Bank also raised its interest rates by 75 points, the highest level in history. It seeks to fight inflation and reduce the expected 8.1% price rise in 2022.
However, regulators have made further announcements about cryptocurrency regulation for several days. Michael Barr, the vice president of the Fed, previously referred to the statements by Jerome Powell.
According to The Washington Post, the US Department of the Treasury stated cryptocurrencies pose a financial risk outweighed by the benefits.
Among several bills already circulating in the US Congress, the House Financial Services Committee recently announced it would run a session on stablecoin markup.
Optimism about the Upcoming Ethereum Merge Might Be Residual
Even though the crypto market capitalization is bullish, the bulls might see residual optimism about the Ethereum upgrade. Therefore, a series of corrections might follow the current moves in the price of cryptocurrencies.
Amid the rise in interest rates, the inevitable rise in the value of the US dollar will drive the crypto market downward.
Investors may wonder whether the crypto market sentiment after the Merge upgrade will determine the price of cryptocurrencies. They must wait for regulations to arrive, but they might not be draconian, and the lobbies might not work well enough in Congress.
By Alexander Salazar
