What happened ?
After a decent rally over the past few months, the crypto market is emerging from a tough weekend as macro concerns continue to instill fear in the broader market.
Over the past 24 hours, the world’s largest cryptocurrency, bitcoin ( BTC -0.31% ), traded more than 5% lower at 12:00 p.m. France (GMT+2). The price of the world’s second largest cryptocurrency, Ethereum (0.87% ETH), traded nearly 7.6% lower.
Markets slid early Tuesday morning before rebounding as investors battled rising inflation, geopolitical crises and the potential for monetary policy tightening from the Federal Reserve. The cryptocurrency market has increasingly tracked the stock market in recent months, making it even more intertwined with global economic factors, such as those stemming from Russia’s war in Ukraine. Minutes from the Fed’s March meeting last week showed its intention to cut its balance sheet by $95 billion each month to fight inflation. The March consumer price index, which measures changes in the cost of food, housing, gasoline, utilities and other goods, rose 8.5% from the previous month. previous year – the biggest surge in inflation since 1981.
— Michael Saylor⚡️ (@saylor) April 12, 2022
#Inflation is worse than you think, and Bitcoin is better than you know. :Michael Saylor
Bitcoin had been stuck below $40,000 after its price jumped 10% to above $42,000 following President Joe Biden’s March 9 signing of a sweeping cryptocurrency executive order. currencies, which asks government agencies to create a cryptocurrency regulatory plan and consider a central bank-issued digital currency. These are the first concrete steps taken by the White House to regulate cryptocurrencies, which have emerged as a key part of the war in Ukraine and continue to drive further volatility in crypto and stock markets.
What investors need to know!
Macro headwinds will continue to impact the broader crypto market. Especially with inflation so high and the Fed likely pulling cash out of the market, there might be less room and appetite for the speculative crypto market.
That said, cryptocurrencies have made their way into the traditional financial system and all over the world, so one should continue to consider the most influential and useful cryptocurrencies like Bitcoin and Ethereum as buy-ins. long term.
When it comes to meme-inspired currencies like Dogecoin, but with influencers like Elon Musk behind it and an already large market cap, you never know.
If you invest in cryptocurrencies, expect volatility to continue. This is why experts recommend keeping your cryptocurrency investments to less than 5% of your total portfolio.
Just as you shouldn’t let a price drop influence your decision to buy crypto, don’t let a sudden price increase change your long-term investment strategy. More importantly, don’t start buying more crypto just because the price goes up. Always make sure your financial bases are covered – from your retirement accounts to your emergency savings – before putting additional funds into a speculative asset.