Crypto assembles for a Fed eruption after $1tn price crash
Bitcoin and cryptocurrency prices have levelled off after a crash in April wiped around $1tn from the combined crypto market – triggered by a “major crypto meltdown” and the Federal Reserve’s “increasingly aggressive” stance, according to US business magazine Forbes.
It said the price of Bitcoin has sunk to lows not seen since summer 2021, pending around $30,000 per Bitcoin. Ethereum and smaller cryptocurrencies BNB, Solana, Cardano, XRP, Tron and Avalanche have been even harder hit by the sell-off, with the Ethereum price sinking more than 60% from its “all-time highs”.
Now, as the Fed forges ahead with its interest rate surge, prompted by inflation, and a balance sheet reduction program, one crypto analyst has predicted Bitcoin will be “one of the best assets on the planet” once risk assets begin to recover and the Fed relaxes.
“I think some of the best assets will be gold, US long bonds, and bitcoin,” Mike McGlone, Bloomberg Intelligence senior commodity strategist, told Kitco News, reinstating his bitcoin price prediction of $100,000 by 2025. “The great reversion is just getting started.”
Forbes said that despite Bitcoin “potentially” heading lower in the short term, McGlone assures the Bitcoin price and the Ethereum price will “outperform” eventually.
“Right now I fully expect bitcoin to trade lower. I don’t’ know how much lower… But what I fully expect is that when we see the foundation form, which is going to happen, Bitcoin and Ethereum should come out ahead because they’ve outperformed for so long.”
The Fed added at the tail-end of last year it would start raising interest rates to counter the high inflation than it had not expected. Inflation steadied slightly at 8.3% in April but remains at “multi-decade” highs.
According to Forbes, the risk of higher interest rates – which sank to historic lows through the Covid-19 pandemic – sparked an ongoing stock market and crypto sell-off, with technology companies that had profited through the pandemic leading the declines.
“Federal Reserve rate hikes are addressing the need for inflation and risk assets to decline and once things stabilise, we see Bitcoin coming out ahead,” McGlone stated in a note this week.
Subscribe to our Editor's weekly newsletter