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BlackRock issues ‘unprecedented’ warning from Fed after $300 billion Bitcoin and cryptocurrency price collapse
Bitcoin
Bitcoin
and cryptocurrency prices have fallen significantly since early June, wiping out $300 billion from the combined cryptocurrency market (even as the market prepares for a $4 trillion “watershed moment.”).
Bitcoin price plummeted from above $70,000 per bitcoin earlier this month as traders scramble to adjust following a serious warning about Federal Reserve interest rates from Treasury Secretary Janet Yellen.
Now, as a bitcoin and cryptocurrency legend bets on a huge China pivotAnalysts at the world’s largest asset manager BlackRock have warned that an “unprecedented” scenario is emerging that could hit the price of bitcoin and the cryptocurrency market.
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BlackRock CEO Larry Fink helped the price of bitcoin and the broader cryptocurrency market rise… [+] this year with its embrace of bitcoin.
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“We see central banks forced to keep interest rates higher than pre-pandemic levels to address persistent inflationary pressures,” say analysts at BlackRock, which has helped spark a boom in bitcoin prices this year. leading a spot bitcoin exchange-traded fund (ETF) revolution on Wall Streethe wrote a report.
“The new macro regime is characterized by higher inflation, higher rates and lower growth due to supply constraints. We see this unprecedented macro cocktail persist. An aging population, the rewiring of global supply chains and the low-carbon transition are constraining production and driving capital investment as economies seek to adapt.”
Last week, the Federal Reserve left interest rates unchanged and signaled it would make just one cut in 2024, and more in 2025. At the start of 2024, the market was pricing in as many as seven interest rate cuts this year .
The Fed has come under pressure to cut interest rates after raising them at record speed in the aftermath of huge Covid-era stimulus spending and money printing that sent inflation spiraling out of control.
Last week, three Democratic lawmakers, led by influential Massachusetts Senator Elizabeth Warren, urged the Fed to cut interest rates and abandon its 2% inflation target.
“We write today to urge the Federal Reserve to cut the federal funds rate from its current 20-year high of 5.5%,” the senators wrote in a letter to Fed Chair Jerome Powell. “This prolonged period of high interest rates is already slowing the economy and failing to address the remaining key drivers of inflation.”
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This year the price of bitcoin has returned to its all-time high of around $70,000 per bitcoin,… [+] largely thanks to BlackRock’s huge new bitcoin spot exchange-traded fund (ETF).
Forbes Digital Resources
Meanwhile, the price of bitcoin has also come under pressure from so-called bitcoin miners, who maintain the network in exchange for freshly minted bitcoins, who sell their bitcoins to pay bills following the halving supply cut of bitcoin in April which saw the block reward cut. from 6.25 bitcoins to 3,125 bitcoins.
“The recent decline in bitcoin prices was also influenced by the high sales volumes of miners,” Matteo Greco, research analyst at Fineqia, a cryptocurrency and financial technology investor, 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 hashrate of the bitcoin network increased significantly in recent years and has only declined by 4% following the halving. This indicates intense competition in the mining sector, with companies forced to find different revenue streams to remain profitable and optimize capital efficiency.