Critical period in the crypto market: Uncertainty is increasing
The crypto asset market, which has been following a volatile course recently, is trying to determine its direction with the developments regarding the presidential elections in the USA and the interest rate decision of the US Federal Reserve (Fed).
The crypto asset market has experienced an active process recently.
Bitcoin, which was traded at $70,000 at the end of July, began to fall after the Fed left policy interest rates unchanged and unemployment in the US reached its highest level in recent years.
Concerns that economic activity in this country could slow down more sharply than expected led to deepening selling pressure.
With concerns that the US economy will enter a recession and sharp declines in global stock markets, Bitcoin's value loss reached 20 percent, and last week Bitcoin fell below the $50,000 level.
As recession concerns eased in the following days, recovery was seen in global markets, and the crypto asset market also recovered some of its losses.
RUSSIA WANTS TO HAVE A SAY
Kadir Has University New Media Department Lecturer İsmail Hakkı Polat said that crypto assets have lost more value than other investment instruments in recent weeks after recession concerns in the US and the interest rate hike by the Bank of Japan (BoJ).
Pointing out that the ecosystem has regained some of its losses, Polat stated that the US elections and the interest rate decision in the country will be decisive for the market in the upcoming period.
Recalling the statements of former US President and Presidential candidate Donald Trump regarding crypto assets, Polat made the following assessment:
“Crypto assets are expected to take shape in the fall depending on Trump's promising behavior in the US elections regarding the ecosystem. It is possible to expect proportional movements depending on whether Trump is elected or not. The Fed meeting in September will also be decisive. Jerome Powell's statements on the interest rate cut, the amount of this cut, and how many times it will be made this year are important.”
Pointing out that Russia has legalized crypto asset mining, Polat said that this situation could contradict Donald Trump's promise of “making the US the center of crypto assets.”
Polat said, “Russia wants to have a say in the production and governance of Bitcoin and crypto assets. When evaluated with Trump's statement of 'We will be the leader of the crypto ecosystem', it is possible to say that a competition between states may begin, especially in Bitcoin and crypto assets.”
Reminding that the crypto asset ecosystem has high volatility, Polat also warned inexperienced investors against risks.
SENSITIVITY INCREASED
Bahçeşehir University Department of Economics Assistant Professor Bora Erdamar said that due to the BOJ's decision, geopolitical tensions and concerns about a recession in the US, a liquidation of $1.02 billion was experienced in crypto asset markets on August 5.
Erdamar assessed that the biggest factor here is the increased sensitivity of crypto asset markets to macroeconomic developments following both the spot Bitcoin ETF and spot Ethereum ETF approvals.
Emphasizing that the news that the markets are most looking forward to in the near future is the Fed's interest rate cut, Erdamar reported that the effects of increasing or decreasing this expectation are observed in pricing.
Drawing attention to the developments in the USA, Erdamar noted the following:
“We are seeing a moderate rapprochement process towards the cryptocurrency ecosystem, which started with Donald Trump in the US presidential election campaigns and now continues with the 'Crypto for Harris' campaign for Kamala Harris. Finally, the fact that a penalty below expectations came in the Ripple Case was interpreted as a less harsh stance on the US side against cryptocurrencies than before. If geopolitical risks do not increase, the Fed's expected interest rate cut and the campaigns of cryptocurrency-friendly US presidential candidates may be reflected in the markets as cautious optimism.”