It's like the chorus of a song.
The cryptocurrency market is depressed again. Prices begin to fall again for a fifth session in a row. We are again under the trillion dollars in terms of market value. To be more specific, the market was worth $997 billion at the time at last check, down 1.3% in 24 hours, according to data firm CoinGecko.
This market has thus lost more than $2.1 trillion compared to its record last November of more than $3 trillion. The current bearish trend is symbolized by bitcoin which has lost 8% of its value in the last seven days. The king of cryptocurrencies fell below $20,000, a threshold under which it had not been since July 14.
Bitcoin was worth $19,871.15 at last check. It is down 71.2% compared to its record of $69,044.77 set on November 10 in the midst of crypto mania.
In recent weeks, the most popular of the cryptocurrencies had stabilized somewhat above $20,000 and even managed to reach the symbolic threshold of $25,000 on August 15 before retreating again on concerns about a monetary tightening of the Reserve federal.
Risky Assets
The equation is simple: cryptocurrencies, which are the face of the crypto industry for the general public, are considered by investors as risky assets in the same way as stock markets and especially technology groups. And as often, risky assets are the first to pay the price when things go wrong. In this case, investors are worried that an aggressive rate hike by the central bank will cause a hard landing for the economy, otherwise known as a recession. They therefore liquidate or steer clear of assets deemed unsafe.
Fed Chair Jerome Powell did not reassure them during his speech Friday at the traditional Fed symposium in Jackson Hole, Wyoming. The economy is likely to need higher rates, for a longer period of time, in order to tame the fastest domestic inflation in forty years, Powell said.
Powell added higher rates would likely lead to weaker near-term growth and softer conditions in the job market, describing it as the "unfortunate costs of reducing inflation."
"We must keep at it until the job is done," Powell said of the Fed's inflation fight. "History shows that the employment costs of bringing down inflation are likely to increase with delay."
The Merge Doesn't Help Ether
Powell added that another "unusually large" rate hike might be appropriate in September, but noted that no decision has been taken and the size of the move "will depend on the totality of the incoming data and the evolving outlook."
Powell's speech even affects alt coins like ether, which is on the rise.
Ether, which is the native token of the popular Ethereum platform, is down 3% to $1,452.24 in the past 24 hours. And yet, the Merge, the famous Ethereum software update, that will be done in two phases in September, is seen as a game changer for the crypto industry.
The Merge is supposed to make blockchain affordable for a large number of people by lowering the prices of transactions and also by attracting environmentally conscious investors because there is going to be a new, much less energy-intensive transaction validation mechanism called proof-of-sate.
Ether is down 70.1% compared to its all-time high of $4,878.26 set on November 10.
