Already in the summer?: Bitcoin & Co.: Groinvestor predicts the end of the crypto crash | news

Cryptocurrencies underperforming in 2022
High inflation and rising key interest rates are a burden
Expert predicts the end of the crypto crash

Cryptocurrencies under pressure

The oldest and largest cryptocurrency in terms of market capitalization, Bitcoin, has at times been described as a protection against inflation and as an alternative to gold. However, over the past few weeks and months, there has been a stronger correlation with tech stocks – which are currently not performing particularly well – rather than with the safe haven gold. After Bitcoin was still trading at around 47,300 US dollars at the beginning of the year, it fell by around 36 percent in the first months of 2022 to around 29,900 US dollars.



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Many other cryptocurrencies have also clearly gone down this year. For example, the ether price at the start of the year was around 3,700 US dollars and has now fallen back to around 2,000 US dollars. Ripple XRP cost around 0.83 US dollars at the beginning of the year and has now fallen to around 0.42 US dollars -dollar almost halved.

Prospect of rising key interest rates burdened

Cryptocurrencies, like other riskier assets, are currently being weighed down in particular by rising inflation and the associated prospect of rising key interest rates, which have recently weighed somewhat on the mood on the stock markets in general. In addition, problems with the stablecoin TerraUSD, which actually stands for high stability, caused turbulence on the crypto market last week. The stablecoin was temporarily worth less than 0.20 US dollars – even though parity with the US dollar is sought. The impact of this crash was not just limited to UST and sister coin Luna, but impacted the entire crypto market. Major cryptocurrencies such as Bitcoin, Ether, Ripple XRP, Dogecoin and Cardano buckled significantly.

Expert expects the end of the downward movement in the summer

As Cointelegraph reports, major investor Raoul Pal also sees the combination of high key interest rates and fears of a recession as the reason for the current weakness of cryptocurrencies: “Retail investor wages have not risen to the same extent as prices, which is why they have an excess Assets are missing, so they have less to invest,” says Cointelegraph Pal. According to the expert, the end of the downward movement of the cryptocurrencies should therefore depend on the interest rate hikes by the US Federal Reserve.


The investment expert therefore assumes that the bottoming out has not yet been completed. So the real crash could be yet to come – for both the crypto and stock markets. But Pal expects that the Fed will loosen its monetary policy at the latest at the time of such a crash. “It is unlikely that the central bank will raise interest rates as quickly and as high as many expect. I suspect that they will stop doing so again in the summer,” said the expert. As a result, new liquidity should flow into the markets and the downtrend in cryptocurrencies could come to an end. “From there, bonds, cryptocurrencies and some of the tech stocks are going to go up significantly again,” Pal said.

It remains to be seen whether the expert will be right and the summer will herald the next uptrend for cryptocurrencies or whether the downward spiral will continue.

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Image sources: r.classen /, TierneyMJ /

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