Coins like Bitcoin have been trading in a narrow range for weeks as both the crypto and stock markets have battled to recover from their May sell-offs. It’s not just about Ukraine’s ongoing conflict and fears about the Federal Reserve’s tightening monetary policy that experts point to.
It has been a poor start for Bitcoin and other cryptocurrencies because of the continued geopolitical and economic instability. Bitcoin and other high-risk investments have been falling together with the Federal Reserve’s gradual reversal of the harsh policies it implemented earlier in the coronavirus outbreak. Recently, the government’s attempts to hike interest rates to control inflation have further weakened investors’ risk appetites.
For the first time over the last four decades, the Federal Reserve is battling a record spike in price increases. Exactly how many rate hikes the Fed will carry out is unknown, but economists expect it to continue until the end of this year and into the year 2023. An interesting question is how much demand there will be for crypto after all of the liquidity is gone.
