After Loretta Mester, president of the Cleveland Fed, indicated that the US central bank had no reason to pause the rate hike, Bitcoin suffered a sharp decline this Wednesday (31), wiping much of the previous week’s gains. was returned.
Bitcoin, trading at $26,900, is about to close out the month of May after four straight months of highs. With just a few hours left until the close of the monthly candle, losses stand at around 7.8% against the US dollar.
Anyway, the trend is still bullish for Bitcoin. Since January 1, the cryptocurrency has posted a 63% gain from May’s poor performance.
Official talks from the Fed are bringing Bitcoin down
While China has been Bitcoin’s main culprit in the past, the US is slowly taking over that position. In addition to heavy regulatory pressure, the Fed’s monetary policy is another point slowing Bitcoin’s rise.
Last week, Fed Chairman Jerome Powell pointed out that he has not yet decided on the next meeting of the US BC, citing that everything will depend on more recent data. His speech caused drops in both Bitcoin and the stock market.
This Wednesday (31) Loretta Mester already spoke to the Financial Times and caused more panic in the markets. According to the Cleveland Fed president, interest rate escalation should continue.
“I really don’t see a compelling reason to pause – which is to wait until you have more evidence to decide what to do”Mester told the FT. “I see a more compelling case for raising [as taxas] and then keep them for a while.
Bitcoin reacted immediately, as indicated in the chart below. The drop lasted into the morning and if nothing major happens in the next few hours, Bitcoin will end the first month of 2023 at a loss.
Trader points to a bullish scenario for Bitcoin
For macro investor Luke Gromen, the rate hike in the US is unsustainable and will eventually push Bitcoin to a new price level at some point.
Speaking to Blockworks, Gromen pointed out that the Fed will bankrupt the US if it continues to raise rates. However, he noted that this will not happen, i.e. the only solution would be to print more money.
“They need to educate more [as taxas para combater a inflação]but soon the only way to make the interest payments is to print money.”
Finally, there is another expected scenario of the US pausing hikes and lowering them again in the long run. In other words, the timing looks good to collect more Bitcoin while thinking about the long term.
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Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
