Officials’ recent comments highlight the need to keep inflation under control, while bonds have had their greatest drop from all-time highs since 2008.
At the Wall Street open on March 24, Bitcoin (BTC) was still fighting for $43,000 support, despite new concerns over US economic policies.
On rises, Kashkari warns against “overdoing it.”
As trading began on March 24, data from several analysts showed BTC/USD remaining slightly below the $43,000 threshold.
Given the significant positive correlation between BTC and equities, U.S. markets were still in the process of settling in their first hour at the time of writing, which was of special relevance to Bitcoin traders. The connection between BTC/USD and the S&P 500, for example, reached its highest level in nearly 18 months this week.
The Federal Reserve was in the news again that day. Neel Kashkari, president of the Minneapolis Fed, disclosed in a widely reported Q&A session that there could be up to seven important rate hikes this year.
He argued that the Fed needed to address the issue of inflation, even if it wasn’t entirely essential.
“There’s a risk of going too far. We’re going to gather data “Reuters cited him as saying.
Attempts to tighten monetary policy, however, had an impact on bond markets, which fell 11% from all-time highs, the biggest retracement since the 2008 Global Financial Crisis, according to markets pundit Holger Zschaepitz.
Global bond sell-off intensifies w/Bloomberg Global Aggregate Bond Index down almost 11% from ATH and so deep in correction territory for 1st time since GFC. pic.twitter.com/O62L67k27K
— Holger Zschaepitz (@Schuldensuehner) March 24, 2022
In turn, Bitcoin may face “headwinds” in the future, according to Bloomberg Intelligence’s chief commodity strategist Mike McGlone.
“Long risk assets may be fighting the Fed,” he wrote, “and one of the riskiest, Bitcoin, is facing headwinds as rate-hike expectations build.”
“Bitcoin is demonstrating its value in a similar way to 2020, when trading in the decentralised crypto network was very fluid compared to halts and limits in equity futures.”
McGlone predicted that a replay of Bitcoin’s 2018 bear market could be on the way, with rates rising as BTC/USD falls from a macro peak.
The price of bitcoin claws back a crucial moving average.
Various media outlets stated that high-profile buy-ins from blockchain protocol Terra had boosted Bitcoin price action throughout the week.
The first three transactions of $125 million each occurred as BTC/USD touched its highest level in over three weeks, which was initially expected to see $3 billion in BTC acquired.
Some questioned the purchases, like statistician Willy Woo, who suggested that given Bitcoin’s liquidity, their scale would be unlikely to make a substantial influence.
I can tell some of you have not executed size before. Let me tell you buying $125mil/day of $BTC for 3 months is a lot.
— Kyle Davies 🔺🌕 (@KyleLDavies) March 24, 2022
Traders were visibly more optimistic on the day, as Bitcoin closed above its 100-day moving average for the first time in nearly four months.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.