While most analysts believed that the bear market was over and that Bitcoin (BTC) pivoted (from a bear to a bull market), most cryptocurrencies fell on Friday and Saturday after Jerome Powell’s recent comments at Jackson Hole. Bitcoin fell below $20k and other virtual currencies followed Bitcoin’s trend.
Is Bitcoin’s Bear Market Over? How Low Can It Go?
Most of us thought that Bitcoin’s bear market was over and that the market pivoted in recent weeks. We have seen Bitcoin move towards $25,000, the highest price in months for the largest cryptocurrency in the market. But this seemed not to be enough for this digital asset.
After the most recent central bank meeting at Jackson Hole, Jerome Powell’s comments affected the perception that the market had about the future of the economy and the FED’s position towards inflation. Considering that the m/m CPI reading of July was 0%, the market believed that the FED was ready to pivot from a hawkish to a dovish stance.
Nevertheless, Jerome Powell warned about possible pain ahead as inflation seems to be higher than expected. This shows that the FED is ready to increase interest rates even further in the near future in order to bring inflation down in the coming months.
If interest rates are higher, it usually affects risk assets such as stocks and cryptocurrencies. Indeed, on Friday, traditional financial markets ended the day in the red. At the same time, we saw Bitcoin fall to $21,000 in just hours, which was very negative for BTC, which hit $25,000 a few days ago and seemed ready to continue its bull trend.
In the last few hours, Bitcoin fell below $20,000 for a short period of time. At the moment, Bitcoin has a price of almost $20,000, according to data shared by CoinGecko. Over the last 7 days, Bitcoin lost 5.5% of its price. At the same time, Ethereum lost 5.6% during the same period of time. The second-largest virtual currency now has a price per coin of $1,490. It also has a market valuation of $180 billion. Bitcoin, instead, has a market capitalization of $382 billion.
Other cryptocurrencies have also been affected due to the most recent sell-off. Solana (SOL), for example, fell by 10.4% during the last 7 days. This has also affected investors that have a riskier portfolio. Most digital currencies in the crypto market have lost part of their value in recent days, showing that Jerome Powell’s comments affected the whole crypto industry rather than specific digital assets.
It will be very important to follow what could happen to virtual currencies and the markets in the future. The FED will play a key role in modelling expectations in the market and affecting different assets. A bullish period for digital assets could start if the FED announces that it is pivoting and that they are not going to raise interest rates higher in the future.