Bitcoin has been holding steady as of late. While it may be a little too early to determine if the world’s number one digital currency by market cap is making its way out of the doldrums and potentially recovering, things are at least staying where they are, meaning dips are (thankfully) taking a break.
Bitcoin Is Staying Still
But there is other good news in the sense that the European Central Bank (ECB) is hiking rates for the first time in roughly ten years. The move is coming right as the Federal Reserve is hiking rates, and yet bitcoin is still managing to maintain its ground. Perhaps the asset is beginning to show signs of maturity.
With two of the world’s largest financial entities choosing to boost rates, it’s a surprise to see that bitcoin is keeping its stance. In the past, when the Fed allowed rates to move up, bitcoin experienced major dips that ultimately contributed to what we’re seeing at the time of writing – most of 2021’s gains being wiped from the slate.
However, this time appears to be somewhat different. The ECB has commented that the rate hikes are coming due to rising inflation throughout the continent. The organization doesn’t quite know how to combat the problem, so said hikes are first on its list of potential solutions.
Marcus Sotiriou – analyst at the U.K.-based digital currency broker Global Block – explained in an interview:
The globalization of markets means that this would affect all economies, so equities and crypto could suffer as a result in the short term.
Alex Kuptsikevich – senior market analyst at FX Pro – also threw his two cents into the mix, claiming that it’s still possible bitcoin could be on the verge of dipping even further. He said that traders shouldn’t be breaking out the champagne just yet. They need to give the asset due time to react to the news before they really start celebrating the currency’s newfound stability. He said:
We still believe that the bear market for bitcoin and the entire cryptocurrency market has yet to play its final act, and that should be expected before the end of the year.
Prices Keep Going Up
With the COVID pandemic now over or very close to being over, many governments around the world are seeking ways to make up for all the spending that occurred during the time of global lockdowns. Much of this spending contributed to the inflation we are seeing today, and everyday citizens are now having to deal with higher prices on food, gas, and other necessities.
Bitcoin was initially trading for about $68,000 per unit at the end of 2021, though now, the asset has lost more than $40,000 from that price and is trading for just over $20,000 per unit – small beans compared to where it was in November.