Markets
BlackRock Issues ‘Unprecedented’ Fed Warning After $300 Billion Bitcoin, Crypto Price Drop
Bitcoin
Bitcoin
and crypto prices have fallen sharply since early June, wiping $300 billion from the combined crypto market (even as the market prepares to a $4 trillion “watershed moment”).
The price of bitcoin has collapsed from more than $70,000 per bitcoin earlier this month as traders scramble to adjust. following serious Federal Reserve warning on interest rates from Treasury Secretary Janet Yellen.
NOW, as a bitcoin and crypto legend bets on a huge Chinese pivotanalysts at the world’s largest asset manager, BlackRock, have warned that an “unprecedented” scenario is unfolding that could affect the price of Bitcoin and the crypto market.
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BlackRock CEO Larry Fink helped the price of Bitcoin and the broader crypto market soar… [+] this year with its adoption of bitcoin.
AFP via Getty Images
“We see central banks forced to maintain higher interest rates than before the pandemic to combat persistent inflationary pressures,” say analysts at BlackRock, which has contributed to the rise in bitcoin prices this year in leading a Bitcoin exchange-traded fund (ETF) revolution on Wall Streetwrote in a report.
“The new macroeconomic regime is marked by higher inflation, higher interest rates and lower growth due to supply constraints. We see this unprecedented macroeconomic cocktail persisting. Population aging, the rewiring of global supply chains and the transition to a low-carbon economy are limiting production and boosting capital. investments as economies try to adapt.
Last week, the Federal Reserve left interest rates unchanged and announced that it would make only one reduction in 2024, with more to come in 2025. In early 2024, the market predicted up to seven interest rate cuts this year.
The Fed has been under pressure to cut interest rates after raising them at a record pace following huge Covid-era stimulus spending and money printing that sent inflation out of control.
Last week, three Democratic lawmakers, led by influential Massachusetts Sen. Elizabeth Warren, urged the Fed to cut interest rates and abandon its 2% inflation target.
“We write to you today to urge the Federal Reserve to reduce the federal funds rate from its current level of 5.5%, its highest level in two decades,” the senators wrote in a letter to the president of the Fed, Jerome Powell. “This prolonged period of high interest rates is already slowing the economy and failing to address the remaining major drivers of inflation.”
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The price of bitcoin returned to its all-time high of around $70,000 per bitcoin this year,… [+] largely thanks to BlackRock’s massive new spot Bitcoin exchange-traded fund (ETF).
Forbes Digital Assets
At the same time, the price of bitcoin has also come under pressure from so-called bitcoin miners – who maintain the network in exchange for newly minted bitcoins – selling their bitcoins to pay their bills following the reduction Bitcoin supply halved in April, which resulted in a reduction in the block reward. from 6.25 bitcoins to 3.125 bitcoins.
“Bitcoin’s recent price decline was also influenced by high miner sales volumes,” Matteo Greco, research analyst at crypto and fintech investor Fineqia, said in an emailed note.
“This event forced miners to optimize their capital efficiency to maintain profitability, initially causing a significant decrease in profitability as rewards are halved from block to block. Additionally, The Bitcoin network hashrate has increased sharply in recent years and only decreased by 4% after the halving. This indicates strong competition in the mining sector, with companies forced to find various sources of income. to remain profitable and maximize capital efficiency.