Last week was a downturn for digital assets as risky markets continue to grapple with downside macroeconomic winds.
O bitcoin (BTC) fell 7% this week and, at the time of this news publication, was trading at US$ 45.8 thousand. Already ethereum (ETHe binance coin (BNB), the second and third largest cryptocurrency of the market, fell 5% and 7%, respectively.
Last week, the announcement of the acceleration of the tapering made by the Federal Reserve (the US central bank) could have been priced, with market trading green in the days following the statement.
However, this appears to have been an upside trap, or a false signal to buy assets, as equity and crypto markets tumbled over the weekend.
Jerome Powell, chairman of the Federal Reserve, announced on Dec. 15 that the Fed will slow down the rate at which it purchases Treasury bonds and mortgage-backed securities.
These purchases were made to support US corporations during economic downturns due to the coronavirus pandemic.
The trade-off of this dovish monetary strategy has been a rapid increase in the rate of inflation.
Inflation data released in the United States indicate that the increase in the price of consumer goods between November 2020 and November 2021 was 6.8% – the highest value since May 1982. Inflation harms the purchasing power of consumer goods. consumption and can be disastrous if it spirals.
“Dovish” indicates that a country’s monetary authority has an expectation of interest rate reduction and a monetary expansion policy.
The Fed has announced it will double the previously announced pace of the taper. The US central bank will cut purchases of Treasury and mortgage-backed bonds to $30 billion a month. In addition, the program is expected to be completed in early 2022, rather than midway through next year.
The crypto market was successful in 2021, partly because of its appeal as a deterrent to inflation. Bitcoin, thanks to its limited supply and decentralized network, was endorsed this year by big-name traditional market figures such as Michael Saylor and Paul Tudor Jones.
A faster taper means a lower rate of inflation and less reason to reserve bitcoin in the short term.
In the crypto market, we are seeing a sudden increase in the number of daily transfers with stablecoins.
This implies that those familiar with crypto are looking for safety from the volatility and downside risks of crypto, through the relative safety of reserving stablecoins and stablecoin yield programs offered by platforms such as Curve.
What’s next this week?
December 20: FTX list Polkadot (DOT)
Popular crypto broker FTX will list DOT, native token of the Polkadot network, this Monday. Trading in the DOT/USD, DOT/USDT and DOT/BTC pairs will open at 11:00 am, Brasília time.
December 21: Kraken to list Avalanche (AVAX)
Also known crypto broker Kraken will list AVAX, native token of the Avalanche network, this Tuesday (21). AVAX will be available for trading on the pairs AVAX/USD and AVAX/EUR, between 12:00-13:00, Brasília time.
Top 10 cryptoactives of the week
With the exception of first tier blockchains like Solana (SOL) and Terra (LUNA), high market capitalization assets were in the red last week.
The total value of blocked assets (TVL) in the blockchain Earth fired last week. TVL has risen 42% in the last week and continues to move towards historic highs.
With the increasing demand for stablecoins, LUNA is being burned faster to create new supply for USDT. This supply shock could be the factor behind the LUNA token increase.
Bitcoin price graph
The price of bitcoin has fallen continuously for most of the past week.
Data from Glassnode website indicates that the main factor behind the drop has been an unprecedented amount of sales made by Asian traders, indicated by the price shift during Asian market hours trading.
One positive point seems to be that Europe and the US are apparently buying continuously, but not enough to offset the drop in Asia.
Source From: Moneytimes
I am an author at Global happenings and I mostly cover automobile news. In my time working in the automotive industry, I have developed a keen interest in the latest developments and trends. My writing skills have also allowed me to share my knowledge with others through articles and blog posts.
