‘They Won’t Be Immune’ — The Fed’s Stark Warning Sends The Price Of Bitcoin, Ethereum, BNB, XRP, Solana, Cardano, And Dogecoin Into Free Fall

After a brief rally, bitcoin

BTC
and other cryptocurrencies pulled back again this week.

The bitcoin price retreated to a little over $40,000, and is now 5.5% down from this week’s high. Ethereum’s price dropped 5.6%, BNB

BNB
3.3%, terra 1.1%, solana 5.2%, cardano 3.8%, XRP

XRP
6.9%, and dogecoin 6.5%.

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The crypto market dipped in light of Fed Chair Powell’s remarks yesterday. In a panel discussion at the IMF, Powell reaffirmed the Fed’s mandate to rein in inflation at any cost and warned about more aggressive rate hikes as soon as next month.

“It is appropriate in my view to be moving a little more quickly… I also think there is something to be said for front-end loading any accommodation one thinks is appropriate. I would say 50 basis points will be on the table for the May meeting,” he said.

That may not bode well for crypto.

[Ed note: Investing in crypto is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

Zooming out

Crypto is no longer just a fringe, speculative asset class out of touch with economics. As digital assets are becoming more mainstream, their correlation to macro forces is picking up.

As such, Goldman Sachs analysts believe the Fed’s actions will have a strong effect on cryptos. “These assets will not be immune to macroeconomic forces, including central bank monetary tightening,” Goldman Sachs wrote in a note.

The question is what that effect will be.

There’s a heated debate among investors about the role of crypto as an asset class. It attempts to answer whether bitcoin and other cryptos are a “risk-on” or “risk-off” investment. As I recently wrote:

“Bitcoin’s proponents argue its limited supply and decentralized nature means that policymakers can’t print it up and depreciate it…