Despite numerous recovery attempts, the most important crypto assets Bitcoin and Ether are still under attack at the start of the week and therefore a few days before the important meeting of the American central bank. In addition to monetary policy risks, regulatory concerns could also have been revived.
Uncertainty in the crypto market remains a top priority, despite attempts at recovery. With a status quo of around $38,700 and $2,800 respectively, the weekly performance of the largest assets by market size, Bitcoin and Ether, is near neutral. The fact that all recovery attempts are obviously used over and over again as an entry point for new sales speaks to a latent uncertainty.
Concerns about the future of monetary policy across the Atlantic continue to act as a major stress factor. The U.S. central bank meeting scheduled for next Wednesday has been casting its shadow for weeks. While a 50 basis point rate tightening seems more or less a foregone conclusion, stockbrokers should listen to Jerome Powell’s words. Recently, the Fed chief had signaled a much faster pace in the interest rate hike cycle and made investors even more nervous.
The Fed could continue its accelerated cycle of rate hikes
In March, the US Federal Reserve had already activated interest rate hikes for the first time since 2018 and raised interest rates by a quarter of a percentage point. Overall, the Fed could raise interest rates in further steps by the end of the year and possibly up to a range of 2.5-2.75%.
Because the prospect of rising real interest rates makes risky asset classes such as Bitcoin and Co less attractive and generally drives interest-bearing assets into play. On the other hand, a rapid reversal in interest rates is now more or less priced in. Should the US Fed adopt a less “hawkish” tone overall on Wednesday, this development could bring a favorable wind to the market. Investors are now preparing for an accelerated recovery in interest rates.
Bitcoin Acceptance is Growing – Central African Republic and Panama Want to Allow Bitcoin as a Payment Method
The Central African Republic and Panama want to follow El Salvador’s example and introduce Bitcoin as an official means of payment. The Central African Republic is believed to be the first country in Africa to introduce BTC as an official tender. Panama itself would thus be the second country in Latin America that is moving towards the approval of digital assets as a means of payment. Last year, El Salvador approved Bitcoin as an official means of payment for the first time in history and caused market turmoil.
The Central American country El Salvador is considered about six months after the first introduction of BTC on a national territory as a model for regions mainly dependent on the dollar who wish to act more independently on the side of the currency.
Still, the continued adoption of digital assets as a means of payment could be viewed with mixed feelings. Concerns about possible regulatory efforts could boil over again. The potential use of bitcoins in the Central African Republic and Panama has likely brought to light a generally uncomfortable topic for regulators. Sometimes the sleeping dogs were awakened again. Regulators around the world may have once again been called upon to step up their regulatory efforts.