Cryptocurrencies do not resist pressure from the Fed

crypto Bitcoin, which has gone through a period of declining investor interest in the currencies, has started to decline again due to fears that the US Federal Reserve (Fed) will raise interest rates further. Bitcoin, which reached $25,236 on February 21, was unable to break this level and turned down its direction. Stuck at the $25,000 resistance, Bitcoin fell to $23,384 yesterday, while Ethereum rose to $1,600 as well. The fact that both producer and consumer inflation are higher than expected in the US raises the concern: “Is the Fed falling behind in the fight against inflation?” In this sense, the expectation that the Fed will become tougher and increase the interest rate up to 6 percent to contain inflation in the next period is growing. In fact, Fed officials support this expectation with their statements.

MAY INCREASE TO 6 PERCENT

Finally, JPMorgan Chase CEO Jamie Dimon, who gave assessments on CNBC, said: “I have great respect for Fed Chairman Powell, but we’ve lost some control over inflation” and said the Fed may increase interest rates at 6 percent. The Fed policy rate is currently at the level of 4.50-4.75%. The market was pricing in a maximum interest rate of 5.25-5.50. Experts say that Bitcoin must see a strong rise to stay above $25,000. Bitay Research Department analyst Alper Samet Yorak stated that additional data or news is needed to ensure the continuation of the increase, recalling that the Fed warned banks about cryptocurrencies: “It is also a new warning for customers regarding cryptocurrencies beware of any liquidity. problems can be cited as the reason for the partial withdrawal experienced yesterday.”

US and IMF warning

fedIn a joint statement, the US Federal Deposit Insurance Corporation (FDIC) and the Office of Money Control (OCC) warned banks about key liquidity risks related to crypto assets. In the statement, it was stated that it is important for banks that use certain financial resources from crypto-asset-related institutions to actively monitor their liquidity risks in light of increasing risks. In announcing its cryptocurrency action plan, the International Monetary Fund (IMF) advised countries not to grant legal currency status to Bitcoin and other cryptocurrencies.