The uncertainties facing the meeting of the fed, the central bank of the United States, scheduled for this Wednesday (26), are putting pressure on the crypto asset market. After ending the last week with an 18% drop, on Monday morning (24) bitcoin plunged 12.43% – at $33,435, the lowest level in six months.
Despite managing to recover the level of US$ 36,000, at 7:10 pm this Tuesday (25) the cryptocurrency was operating down 0.19% to US$ 36,630.20. Specialists believe that in the short term, macroeconomic instability should continue to affect cryptocurrencies. The bearish moment, however, can be a good opportunity for those who are thinking about betting on the market.
For Andrey Nousi, from Nousi Finance, everything depends on the influence of the macroeconomic scenario, with sudden drops in American stock markets, high global inflation and central banks pressured to increase interest rates. Economists are already working on the assumption that the Fed will make three to six rate hikes, which would raise the current US rate from 0% to at least 1.5%.
“In the last cycle, from 2008 to 2020, the period of interest rate increases was very gradual. Even though going from 0% to 1.5% may not seem like much, the American debt is very large. In the absolute value for interest payment, it is a lot of money”, warns Nousi.
With a cascading effect for the rest of the companies and the market, this increase in interest rates in the US impacts higher risk investments – among them, cryptocurrencies. According to Lucas Passarini, a cryptocurrency specialist at the Bitcoin Market, the withdrawal of the Fed’s monetary stimuli changes the risk structure of professional investors, who will avoid being exposed to risky assets, such as the stock and crypto-assets market, migrating to purchase. of treasury bonds.
For Nousi, the escalation of geopolitical tensions between Ukraine and Russia may also be contributing to the bad mood of the market, already weakened by expectations of high interest rates. Ukraine, which intends to be part of NATO (North Atlantic Treaty Organization), is at risk of Russian invasion.
“The movement today is very bad, with the Russian stock market falling 8%, in a geopolitical situation that is getting worse and worse. Armed conflict is something that is never very good, because you don’t know the dimensions of this conflict. And the worst thing an investor can face is uncertainty”, explains Nousi.
Russia is one of the world’s leading oil producers and the possibility of an armed conflict generates risk aversion abroad. In addition, the Kremlin owns about 10% of cryptocurrency miners, but last week it even said that it would ban not only mining assets, but all types of transactions with assets in the segment.
Will it get better?
Although the scenario seems bleak, in the view of experts, the cryptocurrency market is prepared for the coming months. For Felipe Veloso, economist and founder of Cripto Mestre, this movement was already expected, as such assets have cycles. And now it’s time for the casualties.
“When the market is like this, with low interest rates, cryptos and secondary exchanges grow a lot, it generates a speculative bubble. It was a consensus among economists and crypto investors that the bubble was about to burst. And it’s bursting,” he says.
In the view of expert Passarini, from the Bitcoin Market, the market is still pricing the macroeconomic scenario, but the expectation is that the fall in crypto-assets will attenuate from March. “That doesn’t mean it will go up from there. It can be lateralized for several months. For the year, only a consolidation is expected, with no expectation of those who will achieve new highs”.
The most pessimistic forecast by Tasso Lago, private cryptocurrency fund manager and founder of Financial Move. He estimates that bitcoin will drop by as much as $27,000 this year. But the analyst believes that good market fundamentals will ensure the recovery. “The fall did not change the health of the market. Bitcoin has not lost its fundamentals from when it was at $68,000. The market structure, the projects under development and the hashrates follow the same”.
Veloso agrees that, after the impact of the likely increase in the American interest rate, in the long term, the expectation is that cryptocurrencies will recover. He highlights that in 2024 bitcoin will perform a new halving – when, every four years, the asset starts to reward miners half of what was established –, which will increase the intrinsic value of the cryptocurrency and lead it to a new bull cycle. Currently, the remuneration is 6.25 bitcoins per mined block, and in two years it should be 3.13.
“Value tends to increase forever because bitcoin rises at a very slow rate, while governments print money at a very high rate. When we say that Bitcoin is appreciating, in fact, it is the currencies that are depreciating in relation to Bitcoin”, he says.
Experts agree that this is a good time for investors interested in the sector. In Tasso Lago’s view, as the market structures remain healthy, but with a lower price, it’s like buying the asset in the promotion. “It’s an excellent time, because it’s much better to enter the market with bitcoin worth $33,000, $35,000 than when it’s worth $50,000. It’s better to buy on the downside for good projects than on the upside for euphoria,” he says. Lago also highlights that the interested investor must be aware of the volatility of the asset and not panic.
Andrey Nousi of Nousi Finance agrees. For the specialist, it is still not possible to know how far the falls will extend and, therefore, it is necessary to be calm when investing. “I prefer the strategy of periodic contributions, which help you in this type of situation, because they smooth out volatility. If one month you bought and went down, next month you will be accumulating more bitcoins at a lower price. And that gives you more investment discipline, rather than trying to do futurology on the minimum or maximum price,” he says.
The small investment strategy is also the recommendation of Passarini, from Mercado Bitcoin. “Never enter the entire contribution at once. The safest way to invest in crypto assets so far is to maintain a high exposure to bitcoin and then move on to other currencies, with a small portion of the capital in recurring contributions.”
Veloso, from Cripto Mestre, believes that this is already a good time for those who want to start investing in bitcoin, which should fall less than other digital currencies. For these, the economist advises waiting a little longer: “It will be fine to buy altcoins only after August, when the price has melted, when they fall 90% from their all-time high.”