Analysts are coming out that the possibility that the US Federal Reserve (Fed) will close the tapering (reduction of asset purchases) early could burst the Bitcoin and cryptocurrency bubble.
Cryptocurrency plummets after famous Wall Street investor Louis Navellier warned in a recent commentary that ‘Tapering by the US Fed could burst Bitcoin, cryptocurrency bubble’ did,” he said.
“The Fed is tapering, which causes a correction in risky assets such as Bitcoin. As the tapering progresses, more volatility will be observed in stocks, bonds and Bitcoin as well,” Nabellier said. It could be under $10,000,” he warned. This is a drop of more than 80% from all-time BTC highs.
In response, Nabellier said, “There have been numerous examples of declines of more than 80% in the past. “At $46,000 (200-day moving average) is a yellow flag, and $28,500 is a complete decline to $10,000. “I think it’s a double top,” he said.
Representative Bitcoin skeptic Peter Schiff, chairman of Europacific Capital, also said on Twitter, “This sharp decline in Bitcoin is a phenomenon caused by the rise of the possibility of an early closing of the tapering by the US Federal Reserve.”
“The Fed Chairman Jerome Powell recently mentioned that interest rate hikes could be finished about two months earlier, and investor sentiment in risky asset markets like equities and bitcoin is shrinking. I want you to imagine what will happen,” he added.
In addition, Pan Helin, a professor at the Center for Digital Economy at Central South China University of Finance and Economics, said in an interview with Beijing Sangbo recently, “The tapering policy is taking a big hit on the belief of a ‘global currency’ of cryptocurrencies.”
He said, “The recent drop in cryptocurrency prices has been affected by a combination of various factors. However, the most important background is that the policy of the US Federal Reserve is leaning toward tapering. Chairman Powell abandoned the existing ‘temporary inflation’ position, and inflation will continue indicated that,” he explained.
“The shift in monetary policy, i.e., tapering, is taking a toll on the belief of cryptocurrencies as a ‘global currency’. “It’s a reminder that it’s just a token.”
