Investors are treating BTC as a normal asset, which increases its vulnerability in the market.
Investors started to treat BTC like any other asset. It’s for a certain person and certain gains, and it’s perfect for short-term trades. BTC now stands as the world’s biggest cryptocurrency ever based on its value on the blockchain. That makes it extremely extreme, so when investors start treating BTC like all other financial assets, their fear of interest hikes also affects its prices and trends.
Due to the rising fears of interest hikes and the uncertainty of their effect, BTC had one of its most unfortunate starts in 2022. Goldman Sachs has already predicted seven hikes this year. As a way of minimizing their losses, investors are experimenting with other cryptos to invest in. But the issue is with BTC itself because the cryptocurrency vulnerability is strongly attached to the BTC vulnerability. If BTC rises, the other currencies also rise.
The question here is what the connection is between blockchain currencies and interest rate hikes. There is one relation in particular senses rather than an unproven theory. In his latest interview with CNBC, Tom Lee, which is a crypto expert, has made some interesting conclusions and forecasts. Considering the state of today’s stock market, Lee believes that this year’s interest hikes will affect many stocks, payrolls, industries, and businesses as well. In his interview, Lee said that Americans must expect to lose money when owning bonds.
The Federal Reserve has a target for its bond-buying policy to control inflation. The first increase will be at least 50%, or 50 basis points, in March. There is a chance that interest rates will rise by 100 basis points after the second hike.
The lost money from the federal interest hikes will be rotated to BTC and other cryptocurrencies.
Lee predicted that the total U.S. household net worth would lose about $60 trillion of its bond worth after the Federal Reserve initiates its interest hikes. The loss of money will affect stock prices and increase rates such as mortgage rates and debt at different levels. So, the question is, where will the loss of money go? Lee added that the lost $60 trillion would be invested in stocks and speculative capital from equity. The rotation process will follow a more complex path. Eventually, it will be converted into crypto. So, over the next ten years, the lost money from intestine hikes will be converted into cryptocurrency.
Due to the high tension of the Ukrainian crisis and the possibility of aggressive interest hikes, investors are now looking into alternative narratives or solutions. That’s when the BTC narrative represents itself. The rising fears of interest hikes and the ongoing falling stock trends have affected the BTC price early this year. But for most investors, the largest cryptocurrencies are still safe assets. Based on its previous market performance, the new geopolitical tension between the U.S. and Russia makes the BTC the safest currency for the moment.
Experts believe that BTC prices will increase and perform well in the event of tensions and inflation in the current times. That’s why crypto traders have a bright outlook in terms of gains and prosperity. But now the stock market volatility is high, so investors are a bit cautious and afraid of unwanted turns. Unless the U.S. and Russia find common ground and bridges to help cool down the current tension,
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Investors started to treat BTC like any other asset. It’s for a certain person and certain gains, and it’s perfect for short-term trades. BTC now stands as the world’s biggest cryptocurrency ever based on its value on the blockchain.