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Cryptocurrencies Continue to Tumble
16.06.2022

The cryptocurrency market continues to remain under pressure as risk sentiment remains low along with the market’s risk profile. Markets are following the price movement closely, attempting to determine how the price is likely to develop in the coming days.

The price of bitcoin has declined by 6.26% over the past 24 hours and by 25.5% over the past 5 days, bringing the price down to $21,148. Currently, the price of bitcoin is at its lowest since 2020 but traders don’t seem to be rushing to buy the dip just yet.

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The latest price decline was originally triggered by a rise in inflation which was confirmed last Friday. The CPI figure was confirmed as 1%, which is 0.3% higher than expected. Higher inflation data triggered a lower risk appetite in the market as citizens feared that the Central Bank would become more hawkish. Last night their fears had indeed materialized with the Fed confirming that they will instantly increase interest rates by 0.75% and confirmed that a further 0.75% increase is possible at their next meeting.

Furthermore, US officials advised that it is possible that by the end of 2022 the interest rate could reach 3.4%. As a result, the cost of borrowing would become unattractive and most likely dampen demand. So, companies would have to increase the cost of final products to compensate for the costs or cut expenses from elsewhere, such as employees.

The Fed’s latest move has left the traders feeling uncertain about the future and wondering whether a recession will materialize over the coming months. This has resulted in the market diverting its attention towards safer investments and cash because they are, generally speaking, considered to be safer.

Crypto prices have also been pressured by a temporary suspension on cryptocurrency withdrawals on the Binance platform. Of course, the suspension was only temporary and transactions were back to normal in no time. Binance explained that “stuck transactions” caused the suspension but of course, it was too late as the word quickly spread striking fear in investors’ minds.

The market is also keeping a close eye on Ripple’s court hearing. The court hearing between Ripple and the US Securities and Exchange Commission (SEC) regarding an unregistered sale of securities under the guise of XRP tokens for a total of $1.3 billion, is still ongoing. In general, the company is actively developing and offers its partnership to large international brands. For example, the Brazilian platform for international transfers, Remessa Online, announced that it was able to significantly increase its cross-border payment traffic thanks to blockchain solutions based on RippleNet technology.

Additionally, yesterday it became known that the popular wallet for storing coins, Xumm Wallet launched an update, thanks to which its users could make transactions from XRPL accounts, avoiding entering a login and password. The solution also allows users to issue a limited set of rights, which significantly increases the safety of user data.

Overall, the price movement of cryptocurrencies, specifically bitcoin, has been correlated with the stock market as both are largely dependent on the market’s risk appetite. The stock market’s pre-market open price also looks dim with the SNP500 declining by 2% and other indices seeing similar movement.

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When looking at the price of bitcoin we can see that it has remained below moving averages and volume-weighted average price since the 11th of April this year. In addition to indicators remaining bearish, the price movement also seems to maintain its lower low and lower high price movement. Prices have halted this morning and developed into a “multi-directional” price condition, however, this is standard after such a strong decline. Currently, signals could indicate a potential further decline but traders are waiting for confirmation from the price.

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