Bitcoin and Ether See Price Fall..Will There Be A Crash?

Bitcoin and other cryptocurrencies saw a fall in prices today amid a larger tech stockselloff, amid reports of interest rates being raised by the US Federal Reserve. Minutes from a Federal Reserve meeting showed officials are eyeing a faster timetable to raise rates.

This development has led credence to investor concerns that peg cryptocurrencies such as Bitcoin in the as ‘risky asset’ category.

Seemingly volatile investments such as cryptocurrencies are unable to weather the tide of rising interest rates. They therefore become less attractive investments as compared to traditionally low-yield government bonds.

Bitcoin’s dollar value neared $70,000 last November as broader markets rallied in a time of all-time low interest rates, but it has declined to more than 6% lower since the Fed minutes release.

Ether, the world’s second-largest cryptocurrency by market value, has fallen about 10%.

Bitcoin’s which is mined by computers, has largely divided the room as an investing asset. Long-term retail investors see it as a digital currency that may one day challenge the traditional monetary system. Finance professionals view it as a speculative instrument to generate capital in the shorter term.

The central bank indicated in its December minutes, published Wednesday, that interest rates will likely be raised to counter high inflation in the US economy. 

The Fed minutes also revealed that it is considering shrinking its balance sheet. As buying bonds will be tapered off and selling increases, so will yields and that’s bad news for technology stocks.

Higher bond yields make the fact that tech companies are counting on big profits in the future redundant.

Consistent with the Fed developments, crude prices went up to $79 a barrel.

BitcoincryptocurrenciesInvestorUS Federal Reserve