Cryptocurrency traders have been suffering a slow painful death after the Fed ran out of excuses in tackling inflation. In just a few months, Wall Street had to reprice a much more aggressive Fed tightening strategy that made Bitcoin go from having a simple correction, to entering bear market territory, and now has fallen over 50% from its record highs.
Many crypto traders were anticipating one last plunge before jumping back in, but the regulatory environment got a lot cloudier now that the White House may soon unveil some national security challenges posed by cryptocurrencies and the Fed’s paper on central bank digital currencies didn’t answer any questions on if we will see a digital dollar or how they could work with stablecoins.
The majority of retail and institutional traders that got started in crypto in 2021 are now in the red and their patience may not be as long lasting as traders who are used to Bitcoin’s extreme volatility during major de-risking events. Bitcoin should have support ahead of the $30,000 level, but if that breaks it could be a freefall to $22,500.