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- The U.S. Federal Reserve’s stance on the interest rate and inflation increases.
- Outflows for six weeks in a row have been reported.
- Bitcoin bulls may benefit from the U.S. government’s low emissions.
The U.S. Federal Reserve’s stance on interest rate increases and high inflation is the most important factor in determining the demand for risky assets. The Fed enhances the profitability of fixed-income instruments by raising the cost of capital, but this may otherwise for the stock market, real estate, commodities, and cryptocurrencies.
The fact that the Fed schedules its meetings well in advance allows Bitcoin (BTC) traders to prepare for them. Risk assets have traditionally seen extremely high intraday volatility due to Federal Reserve policy decisions. Still, traders can employ derivatives instruments to get the best outcomes as the Fed modifies interest rates.
BTC Bitcoin Liquidations Exceed $130M in Value
Almost $132 million worth of Bitcoin was liquidated, while investors lost $51 million worth of Ethereum as of publication. XRP positions were liquidated for about $8 million. The greatest single liquidation order, worth $7.39 million, according to Bitmex.
The data was released following a 25 basis point interest rate increase by the US Fed. Commentators thought that the top bank’s tightening of monetary policy could be suspended in light of the instability in the banking industry. According to government data, the Federal Reserve did not change course, despite consumer inflation declining to 6.0% YoY.
In the meantime, over the last 24 hours, the market capitalization of all cryptocurrencies has dropped by 2%. The total capitalization is still greater than $1 trillion, though. The price of Bitcoin has decreased in a similar range, although it is still afloat at a high of around $27,000.
According to the data released on March 20, withdrawals from digital assets totaled about $500 million. With outflows of $113 million over the past week, bitcoin set the trend.
Bitcoin’s Low Emissions To Be Beneficial?
Once investors know that the Fed is out of measures to control inflation, Bitcoin’s low emissions might also prove advantageous. If interest rates are raised even further, the U.S. government’s debt repayments might go out of control and possibly top $1 trillion annually.
This provides a significant incentive for Bitcoin bulls, but those prepared to execute trades based on increases in interest rates must exercise extreme caution.
Risk-takers may benefit from leveraging their positions by purchasing Bitcoin futures contracts. Still, they also risk having their positions liquidated if the price suddenly drops before the Fed decides on March 22. Because of this, professional traders are more inclined to choose options trading methods.
Regulators Activate Influencers and Crypto Businesses
Massive liquidations also occur amid the securities regulator’s strict enforcement. The TRON Foundation, BitTorrent Foundation, Rainberry Inc., Austin Mahone, and Deandre Cortex Way were recently sued by the U.S. Securities and Exchange Commission for selling unregistered securities, along with cryptocurrency tycoon Justin Sun.
Meanwhile, allegations of securities violations also include a number of famous people. According to a statement from the agency, eight celebrities, including Lindsay Lohan and Jake Paul, are being held for endorsing illegal cryptocurrency-based products.
The largest U.S. cryptocurrency exchange, Coinbase, has also been the subject of a Wells Notice from the SEC. For certain products it provides, Coinbase Global Inc. is the subject of an enforcement action by the securities regulator.
Despite this, most people in the sector have a positive view. According to Cathie Wood of Ark Invest, who spoke to Bloomberg, institutional investors may return to the market due to Bitcoin’s resiliency in the face of the banking crisis.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
