Bitcoin hit its 2022 low, dipping below $19,000. ETH has fallen below $1,300.
Despite some positive developments earlier this month, the crypto market is experiencing moderate bleeding as Bitcoin (BTC) hits its 2022 low. Ethereum has also slumped sharply, even as it successfully made the switch to Proof -of-Stake.
It is worth remembering that BTC has been falling since reaching a high of $25,211 on August 15. On August 26, the downside move triggered a breakout of a rising parallel channel that had been in place since the June 18 low.
Following the crash, Bitcoin continued to fall and reached a low of $18,510 on September 7. The bottom was made slightly below the $19,000 support area, which was created by the June lows.
Bitcoin has dipped below $19,000 while Ethereum has dipped below $1,300. The crypto market capitalization has also fallen below $950 billion, a 6.4% plunge in the last 24 hours alone.
Not the positive showings investors wanted, especially after patiently enduring a “crypto winter” through 2022.
Bitcoin selling has intensified following the news that Russia shut down the Nord Stream 1 pipeline, halting gas to Europe and spooking markets, experts say.
It is difficult to say what has motivated the capital outflow, as there have been several potential incidents that may have influenced the price decline. The discussion has been particularly strong for Ethereum, which has had a historic month going through “The Merge”.
Ethereum Is Back Below $1,300 after The Merger
Ethereum’s crash below $1,300 is perhaps bigger news than Bitcoin’s crash. After all, many expected the asset to benefit from positive price movement following The Merger. However, that does not seem to be the case in the short term.
There are a few reasons that seem likely as to why the price of ETH fell. First, SEC Chairman Gary Gensler sparked a debate after suggesting that moving to a PoS model could make ETH a security.
There is no definitive statement on this, but the debate on this topic has been going on for a while.
There are also some concerns about centralization, as data from Santiment also showed that more than 45% of Ethereum transactions were processed by two wallets.
Analysts have also pointed out that flashbots have broadcast over 82% of the Ethereum Block Meltdown.
The Fed and Interest Rates
There is another major reason why analysts are bearish on the short-term outlook for the crypto market. This is the fact that the US Federal Reserve is expected to raise interest rates at its next meeting.
The Federal Reserve’s four-decade monetary policy of keeping interest rates high to fight inflation has prompted investors to sell riskier assets such as stocks and Bitcoin.
Rates are expected to rise another 75 basis points. The Federal Reserve has been interested in reducing inflation rates in the country, but the seriousness of raising interest rates has not been well received.
There has also been talking that a recession may be upon us sooner rather than later.
According to Bloomberg Senior Commodity Strategist Mike McGlone, for the Fed to stop its aggressive interest rate hikes that herald a recession, markets, including cryptocurrencies, need to come down. “I don’t see what stops [a recession]… other than risky assets going down and going to a lower level.”
By Audy Castaneda