Hi HODLers,
Yup, these boomers in this old school room will probably decide how cryptomarkets are going to behave until year-end. Why is that? Read more to understand.
You probably heard about the word tapering from financial news sources. Next thursday there is a critical meeting of the FOMC (US Central Banks) that should implement an increase of the tapering.
Tapering definition:
Tapering is the reduction of the rate at which a central bank accumulates new assets on its balance sheet under a policy of QE. Tapering is the first step in the process of either winding down—or completely withdrawing from—a monetary stimulus program that has already been executed.
Bitcoin taking a hit
If you have been following me, I have often been vocal about the risk to crypto (and stock market) of rising interest rates. Rising interest rates usually means that it costs more for investors and speculators to take leverage positions or to borrow money. Also returns are getting better for less risky assets.
An important part of this bull market (stocks, bonds and cryptocurrencies) has been that mone kept getting cheaper and therefore to get yield and finance pension plans, etc... investors had to jump into riskier assets. This is called moving up the risk curve.
“BTC is among one of the worst-performing assets compared to traditional asset classes since the November FOMC meeting, losing nearly 20% of its value over the last month.”
We benefited from it but it seems we are going the other way now. It will adjust at some point but gains might be lower and volatility also lower.
I also believe that inflation is close to getting out of hand. If the FOMC let the money printer continue to go Brrrrrr! it will face an important inflation and who knows how this will unfold in a few months.
Stay safe out there,
Bitcoin price slips below $47K as stocks, crypto prepare for this week’s FOMC meeting