There was a reversal in the price of Bitcoin over the weekend when it fell below the historically significant US$20,000 threshold. There has been no recovery since then.
The price of bitcoin had already reached $20,408 by Friday morning. Bitcoin can’t seem to consistently escape its strong ties to risky investments like high-growth tech stocks.
Bitcoin Fear and Greed Index is 22 — Extreme Fear
Current price: $19,326 pic.twitter.com/wg6eXOQenG
— Bitcoin Fear and Greed Index (@BitcoinFear) October 10, 2022
After the release of an unexpectedly positive September jobs report from the United States, which caused the NASDAQ to close 3.8% lower, crypto prices generally came under pressure on Friday.
What does this mean for cryptocurrency?
Since the US Federal Reserve is attempting to put the inflation genie back in its bottle, cryptocurrency investors should expect more aggressive tightening from them. In this case, the good news is bad news for the price of Bitcoin.
Fed governor Christopher Waller stated, “I don’t know how we can pause until I see some signs of inflation moderating.” Bitcoin’s price has fallen 59% so far this year due to the rate of increase in interest rates in 2022.
The bitcoin price goes up as more people self custody the asset.
Starve the exchanges by taking your bitcoin off of them.
What are you waiting for?
— Eric Podwojski 🟠 (@epodrulz) October 9, 2022
Art Hogan, the chief market strategist at B Riley, cited pressure on cryptocurrencies as coming from the US’s sharp decline in money supply (M2).
According to Hogan, it makes sense to assume that when the money supply shrinks, less money will be available to invest in risky assets. And during the last 12 to 18 months, it has become abundantly evident that cryptocurrencies are risky investments. That would seem to have a detrimental impact on some of the riskier corners of the financial landscape.
Lauren Goodwin, a portfolio strategist at New York Life Investments, added that, like gold, the price of Bitcoin and other cryptocurrencies aren’t living up to the hype surrounding them as inflation hedges.