Prices of cryptocurrencies such as Bitcoin, Ethereum and XRP started to fall yesterday. Yesterday, the eyes of many investors around the world turned to the news from the Fed and assets such as gold and Bitcoin started to lose value. So why are crypto money prices falling after the Fed’s announcement?
The total value of the crypto money market was around 270 billion dollars until 1 month ago. But with the appreciation of cryptocurrencies such as Bitcoin, this number has increased to $ 385 billion in the past week.
The cryptocurrency market started to shrink as Bitcoin fell below $ 12,000. As cryptocurrency prices continued to decline, the total value of the market fell by $ 20 billion and fell to $ 365 billion. Meanwhile, there was a 6.5% decrease in the Bloomberg Crypto Money Index prepared by Bloomberg specifically for Bitcoin, ETH and XRP. Since there has not been such a big drop since June 11, the record for the last two months has been achieved.
Market Moving Based on Dollar
As the prices of cryptocurrencies like Bitcoin, ETH and XRP continue to fall, investors are wondering what lies behind this. It will be possible to address this curiosity of investors by referring to the recent performance of the dollar.
The dollar began to depreciate against both the euro and gold since March. Meanwhile, the Dollar Currency Index, which is used to measure the dollar’s strength, has seen the bottom of the last two years. Most experts; He explained that the loss of the dollar’s strength will result in the gold and bitcoin prices rising.
Although the reserve currency has started to weaken in recent months, some developments in recent days have been in favor of the dollar. The minutes of the meeting published by the Fed yesterday evening, aroused a reaction in the markets that the dollar could regain power.
Why Is Crypto Money Falling?
The Fed shared the minutes of the Federal Open Market Committee meeting on July 28-29 last night. At this meeting, where the economic effects of the coronavirus and the policy followed and to be followed by the Fed were discussed, “uncertainty” was emphasized for the future.
The dollar started to gain some strength after the Fed published these meeting minutes. The Dollar Currency Index dropped as low as 92,124 on Tuesday, the lowest level in the last 2 years as we mentioned. However, the dollar rose as high as 93,059 after the news from the Fed front. John Doyle, one of the directors of Tempus Inc., according to Reuters; He thinks the dollar has gained strength due to the decline in the stock markets. According to his estimates, after the Fed’s emphasis on uncertainty, many investors started selling profits, which added strength to the dollar.
Experts explain the decline in gold and cryptocurrency prices with this development. Mati Greenspan, founder of Quantum Economics, who shared his views on the subject; He reminded that the crypto money market moves in a dollar-dependent manner. According to Bloomberg’s report, the strengthening of the dollar caused cryptocurrencies such as Bitcoin to lose value.