There has been a turbulent atmosphere in the crypto market in recent days. As we reported at Kriptokoin.com, Bitcoin and Ethereum experienced significant declines today after their strong performances in the past weeks. So, what is the reason for these pullbacks? What risks and opportunities await investors? We examine the details behind these fluctuations.
Fed’s Interest Rate Stubbornness Shakes Markets Along with Bitcoin
The recent statements of the US Federal Reserve (Fed) Chairman Jerome Powell have turned the expectations of crypto investors upside down. Powell made it clear that interest rate cuts will not come anytime soon. “The economy is not signaling that we need to cut interest rates,” he said. This statement had an immediate impact on risk assets, with the price of Bitcoin falling by about 3%.
Interest rates remaining high causes investors to withdraw from risky assets. Volatile assets such as Bitcoin are especially more sensitive to such macroeconomic developments. Powell’s words were disappointing in the market, and expectations for a rate cut in December also weakened. This situation will create a new resistance in the price of Bitcoin.
Institutional Interest in Ethereum Is Increasing, But Is It Enough?
Ethereum , like Bitcoin, has had its share of Fed statements. However, Ethereum’s story is a little different. Institutional investors’ interest in Ether has been increasing recently. More than $500 million has flowed into spot Ether ETFs in the US in one week. This is an indication of confidence in Ethereum’s long-term potential.
But in the short term, Ethereum is also in a downtrend. The price is currently trading around $3,133. While the support zone between $2,800-$2,900 seems strong, investors are wary of the risk of falling below these levels. According to technical analysis , Ethereum is losing value against Bitcoin, and more recovery signals are needed.
Altcoins and the Danger of FOMO
The declines in fBitcoin and Ethereum also directly affect the altcoin market. However, some analysts say that the altcoin season has not yet started and that FOMO should not be carried away during this period . For example, Ethereum’s loss of value against Bitcoin is a situation that altcoin investors should pay attention to.
According to experts, a real altcoin season will begin with the decline of Bitcoin dominance. However, at the moment, the market is more focused on Bitcoin’s movements. This means that even if there are short-term rallies in altcoins , they may not be sustainable.
What Should Bitcoin and Altcoin Investors Do?
Markets are affected by the Fed’s tight stance and macroeconomic uncertainties. However, the long-term potential of Bitcoin and Ethereum is supported by institutional investments and technical indicators. It is critical for investors to be careful in these volatile market conditions and keep their long-term goals in mind. Short-term movements can be misleading, so it is useful to follow the market with a calm mind.
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