According to economists, the current drop in the value of bitcoin can be attributed to market expectations of the Fed’s rate hike. Some traders and investors are counting on progress in the cryptocurrency’s dynamics in the near future.
An increase in the key interest rate by the US Federal Reserve is exerting strong pressure on BTC, analysts are sure. Nevertheless, they believe that investments in bitcoin are still quite promising.
For several months, the Fed has been gradually raising the key rate. This contributes to gains in traditional dollar-denominated financial instruments. As a result, some traders who used to invest in cryptocurrencies are returning to this market.
However, the outlook for bitcoin is rather gloomy. As long as the US central bank sticks to its hawkish stance regarding raising rates, bitcoin will most likely continue suffering losses.
At the same time, analysts pay attention to a potential rebound followed by a rally in the first cryptocurrency. However, the digital asset market is highly risky and volatile. Therefore, sharp fluctuations in virtual currencies cannot be ruled out.
Against this background, experts recommend that market participants assess all possible risks when investing in cryptocurrencies. This is an extremely unstable segment of the financial market. Cryptocurrencies are mostly unregulated. Thus, investors need to be prepared for frequent and dizzying swings in digital asset prices, economists warn.
