Cryptocurrency The world has gotten complicated. Bitcoin price has moved away from its November peak of $69,000 and is trading at $35,200 at the time of this writing. In addition, there is a decrease in the transaction volume of cryptocurrencies.
Some investors are worried that the market is entering a kind of “crypto winter”. The crypto winter has been called the Fed’s tightening of monetary policy and market prices falling sharply and failing to recover for more than a year.
However, according to some analysts, the situation could be worse than that. Invesco’s head of global asset allocation research, Paul Jackson, recently claimed that the cryptocurrency world could enter a kind of “crypto ice age”, as a result of which prices may remain low for years and investor interest is lost.
It’s not just about the Fed’s monetary policy, either. A large number of potential investors have doubts about the robustness of crypto technology and also think that the authorities can interfere with this industry.
Fed Could Send Cryptocurrencies to the Ice Age
In the conditions of the coronavirus pandemic, after the large amount of money transferred by the US government and the Fed to the market increased inflation in the USA Fedbegan to follow the opposite policy. Markets expect four rate hikes in 2022.
Technology company stocks and cryptocurrencies were hit hard as bond yields soared. According to analysts, these two asset classes now look less attractive than risk-free bond yields.
However, according to Jackson, the bad trend may be behind: “Central banks and governments played a role in the rise of such speculative markets. With these institutions now following the opposite policy, they can also be effective in the decline of cryptocurrencies.”
On the other hand, James Malcolm, head of currency strategy at UBS, claimed that in addition to tight regulation concerns, some problems with cryptocurrency technology are one of the factors that could put this industry into a winter season:
“A lot of people in the tech world question whether crypto technology is efficient. If this is really the technology of the future, why didn’t big technology companies immediately take initiatives in this area? Why hasn’t Google invested large sums in this space?”
Although some experts are hesitant about the technology of cryptocurrencies, in fact, this technology is now seen as the technology of the future that the whole world wants to adapt to.
*Not Investment Advice