After nearly doubling its value in just one month, Bitcoin seems to be slinking back down toward lower numbers.
This morning, the much-loved cryptocurrency is back down under $8000 after reaching a high of over $9000 May 30.
A subsequent correction went to $8000 and this value sprung back to $8800 June 2 before coming to rest in under the $8000 mark.
Having bullishly broken through the psychological price point of $9,000 at the end of May, Bitcoin has gradually corrected downwards in subsequent days,” Cointelegraph reporter Marie Huillet writes this morning. “To press time, the top coin is trading at $7,950 — roughly 6.7% down on the day and losing its hold on the $8,000 mark … Bitcoin’s sharp tumble started very early trading hours, with the coin swiftly dropping from roughly $8,500 at midnight to around $8,000 by 1:00AM …Since then, the cryptocurrency has brushed an intraday low of roughly $7,865 before slightly regaining ground before press time.”
Huillet also remarks on losses in Ethereum, which has seen sort of a similar trajectory.
Ethereum’s chart is extremely interesting as this cryptocurrency doubled over six months, consistently hitting six-month highs through the end of May and the beginning of June.
However, after cresting at $280 over the last week in May, the ETH vantage point at around $245 means short-term traders have lost money, while anyone buy-and-holding Ethereum from points earlier in the year has decidedly gained quite a bit!
Ripple and other coins have also lost, but what’s really interesting about Huillet’s article is a paragraph at the end talking about the rest of the U.S. economy:
“Yesterday, St. Louis Federal Reserve president James Bullard revealed that a U.S. interest rate cut “may be warranted soon” in light of the risks to economic growth presented by international trade feuds as well as weak domestic inflation,” Huillet reports.
That brings us to an interesting analysis of Federal Reserve activity that could have a major impact on both crypto and conventional markets.
There’s been a consensus that the Federal Reserve’s main goal is to raise interest rates over time. It wasn’t too long ago that we were reporting on whether or not the Fed would crank up interest rates in order to bring the economy back toward long-term solvency.
Then reports emerged of the White House pressuring the Fed, improperly according to political scientists, to keep interest rates low. Then reporters revealed that Trump was asking the Fed to cut interest rates. Now, economists are saying that an interest rate cut may be on the horizon.
However, many economic experts believe that lowering interest rates would only delay long-term problems.
“The president of the Federal Reserve Bank of Cleveland dismissed the notion that policy makers should cut interest rates to raise inflation,” wrote Christopher Condon at Bloomberg May 23 on an interview with Loretta Mester on the best way to tackle U.S. economic strategy. “Instead, officials should simply be careful not to react too quickly when prices move back up again, as she expects them to later this year.”
Condon quotes Mester as recommending this approach:
“If you really wanted to get inflation expectations moving up, you’d have to take really aggressive action — if that was your only goal, … but that would be bad policy because we have another goal and the risk you’d be running on the other goal would be excessive. Since we’re not far from our goal, I’d rather do something that is more prudent, which is be willing to keep interest rates low.”
Watch out for new Fed moves and how they will affect the market, as trade concerns continue to push the general market into distress, and crypto values are falling, too.