crypto news: Crypto market awaits Powell’s testimony amid inflation worries

New Delhi: Bitcoin broke through $40,000 on Monday after weakness in the riskiest asset class as investors lacked risk appetite. This week was marked by heavy losses in the recent asset class.

However, Bitcoins showed some strength on Tuesday, ahead of Federal Reserve Chair Jerome Powell’s testimony to the US Congress later in the day, which could point to signs of tapering and expected hikes in interest rates later in the evening.

Rising inflation, hawkish stance from central banks, and extreme volatility are all weighing on the cryptocurrency markets. Goldman Sachs’ prediction of four price increases in 2022 has left the cryptocurrency market looking dark red.

All eyes are on Powell’s comment to Congress, which has made clear his goal of curbing inflation. Markets will be looking for guidance from the Fed Chairman because financial markets don’t like uncertainty.

Edul Patel, CEO and co-founder, Mudrex said that there is a lot of uncertainty amid speculation regarding the announcements that the Fed chair will make.

He added, “With inflation almost out of control, we are likely to be staring at some drastic action by the US Federal Reserve. This uncertainty is causing the market’s nervous reaction.”

The total market capitalization of the cryptocurrency market has fallen below $2 trillion as the big giant has lost its shine. The trading volume in the cryptocurrency market received a huge success as the daily volumes remained below 100 billion.

The world has witnessed an unprecedented amount of money printing in the past two years which has shown its impact on asset prices across all asset classes.

Shivam Thakral, CEO of BuyUcoin, said that if tapering were to occur, it would reduce the liquidity of fiat currencies in the market and could have a significant impact on cryptocurrency prices and the prices of other assets around the world.

“We hope that his testimony in front of Congress will create a positive sentiment in the crypto market,” Thukral said.

Crypto experts suggest that investors shouldn’t read too much between the lines that Powell showed his optimism about cryptocurrency and blockchain earlier.

Patel said Powell acknowledged inflation as the main concern but did not talk about raising interest rates. Even so, “the Fed will be very focused on addressing the inflation situation.”

Not just Bitcoin, Ethereum broke the $3,000 mark on Monday. Other tokens including BNB, Solana, Cardano, Terra, Polkadot and Avalanche have lost as much as 15-20 percent of their value in the past week.

Powell’s hawkish comment may test support for riskier assets later in the day. However, experts believe the dips are a buying opportunity.

BuyUCoin’s Thukral said seasoned investors are buying into dips and increasing their holdings, while Patel of Mudrex suggested investors do dollar cost averaging (DCA) to relieve the pain of market timing.