Following Bitcoin’s most recent episode of excessive volatility, the cryptocurrency market is in a funk. According to CoinMarketCap data, Solana (SOL), Terra (LUNA), Polkadot (DOT), and Ripple-affiliated XRP are all down around 6% in the last 24 hours.
Theta Network (THETA) is the only notable cryptocurrency that has defied the trend, rising by 24%.
Bitcoin’s price peaked at $45,821 on the Bitstamp platform on Feb. 10, a remarkable return after being battered by higher-than-expected inflation.
The US Federal Reserve will be emboldened to undertake an even more aggressive rate hike campaign if consumer prices continue to rise sharply. The Federal Reserve is expected to raise the benchmark short-term interest rate at least seven times in 2021, according to Bank of America.
Bitcoin’s outperformance, according to market expert Alex Kruger, might be ascribed to the “sound money” myth that surrounds the cryptocurrency.
The Bitcoin market, however, experienced another downturn when St. Louis Federal Reserve President James Bullard voted in support of the first rate hike in more than a decade. According to Goldman Sachs, the Fed could raise rates by 25 basis points at each of its forthcoming sessions in 2022:
“We see the arguments for a 50bp rate hike in March… So far, though, most Fed officials who have commented have opposed a 50bp hike in March. We therefore think that the more likely path is a longer series of 25bp hikes instead.”
Bitcoin’s price fell to an intraday low of $42,600 on February 11, down nearly 7% from its recent high.
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