Bitcoin and major cryptocurrencies, including ethereum and XRP, have experienced a significant decline as traders anticipate a correction amidst concerns of a potential crackdown by the Biden administration. The bitcoin price has dropped by over 10% in the past week, leading to a combined loss of $300 billion from the crypto market since its recent peak of $2.8 trillion.
Elon Musk's reentry into the crypto market has garnered attention, with traders closely monitoring the Federal Reserve's upcoming interest rate decision, which could further impact prices. The Fed is expected to maintain current rates, but economists suggest a longer period of high rates due to inflation concerns.
Recent U.S. inflation data showed higher-than-expected price increases, prompting speculation that central banks may raise interest rates to curb inflation. However, this could lead consumers to invest more in crypto assets as a hedge against inflation, given the perception that cryptocurrencies are immune to inflation.
Japan's central bank has raised interest rates for the first time since 2007, signaling a shift in monetary policy. The launch of bitcoin spot exchange-traded funds (ETFs) on Wall Street has injected momentum into the crypto market, attracting billions of dollars in investments.
The sentiment in the crypto market has shifted from cautious optimism to euphoria, driven by the U.S. spot bitcoin ETF launch and the Fed's monetary policy stance. Despite the recent dip in prices, experts remain optimistic about the long-term prospects of bitcoin, ethereum, and other altcoins, predicting new all-time highs and increased institutional participation in the crypto space.
