What’s next for Bitcoin and Ethereum after the crypto crash?
(Kitco News) After falling 50% from their all-time highs, Bitcoin and Ethereum will need to prepare for greater volatility as the crypto market recovers, analysts say. The long-term outlook remains optimistic for cryptocurrencies, however.
The crypto market is pretty quiet after a wild week, with Bitcoin and Ethereum trading at $36,000 and $2,380, respectively.
Cryptocurrency price movements continue to be closely tied to US equities, which remain under pressure in light of the Federal Reserve’s hawkish announcement on Wednesday.
“Bitcoin’s roller coaster isn’t over yet, as risky assets are hit by rising expectations that the Fed could be more aggressive this year. interest rate this year sends the best performing assets into the pandemic slump,” said Edward Moya, senior market analyst at OANDA.
The next few months should be filled with choppy trading for crypto assets, Moya said. “The Fed’s aggressive fight against inflation will ease once financial conditions come under threat and that’s a long way off. The next two months will remain very choppy for crypto markets, but fundamentals still support a broader formation for top performing cryptos,” he mentioned.
Fed Chairman Jerome Powell stressed on Wednesday that the inflation situation in the United States was “slightly worse” than in December as he announced a rate hike in March.
This macro trigger is currently driving the crypto market, GlobalBlock analyst Marcus Sotiriou told Kitco News.
“The most recent selloff has been particularly driven by macro conditions. Fed stocks are leading the market right now. The Fed doesn’t seem too bothered by falling valuations. Its main concern is dealing with supply chain issues. supply as they try to fight inflation,” Sotiriou said.
Cryptocurrencies and equities will struggle for the next two months — until the Federal Reserve’s next monetary policy meeting in March, Sotiriou noted.
“Trading will be a bit difficult. Institutions will try to hedge against a rate hike in March. Whether or not it will be a double rate hike is still unclear. But once people get realize that the Fed’s 2.5% hike won’t change things at this point, the bullish trend in the crypto market could restart. The long-term view is still very optimistic,” he said.
This type of high volatility is not new to the crypto space, said Tokens.com CEO Andrew Kiguel, noting that these types of moves are part of a larger pattern.
“Crypto will have another good year. People forget that the price of Bitcoin almost doubled in 2021. If you look at the increases over the year, it was 60%. Ethereum was even higher. The market for crypto is known to hit everything – high times, then correct,” Kiguel told Kitco News.
This year, Kiguel sees a separation occurring between the price of bitcoin and the price of other crypto assets that deal with Web3, such as Ethereum.
“There will be more of a separation coming between bitcoin and web3 assets. The main catalyst for bitcoin will be regulatory – on the mining front and if the SEC allows the actual Bitocin ETF. And Ethereum will be driven by web3 developments, including metaverse, crypto gaming and DeFi,” Kiguel said.
In light of this price separation, Ethereum is looking to outperform Bitcoin once again in 2022, Kiguel added. Bitcoin is planning to move between $80,000 and $100,000 this year and Ethereum could rise another 400% from current levels.
“Bitcoin is expected to end the year 40-50% higher than 2021. Ethereum will have a much bigger advantage as it completes its transition to proof-of-stake, which will make it much faster and more usable for NFTs. , DeFi and the Metaverse,” he said.
Additionally, the inflation narrative will continue to support bitcoin throughout the year as retail investors and institutions seek assets that can be used as a hedge against rising price pressures.
And with inflation hitting four-decade highs in the United States, Bitcoin’s case will resonate with even more investors, Shakepay CEO Jean Amiouny told Kitco News.
“Bitcoin is still in its adoption phase. It was created as a way for individuals to save money in a decentralized way. Higher inflation shows you that the dollars in a savings account are not a means of accumulating wealth.Bitcoin is a throwback in a way.Because it is a fixed supply,it is money.It will act as a better money account. savings,” Amiouny said. “In the short term, the price is volatile. But if you’ve used bitcoin as a savings account for the past decade or even two years, you’re definitely richer today. than in the past. in the long term too.”
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