Bitcoin has been in decline since the beginning of May – following the decline in technology stocks in the United States – sectors are affected by the rise in US interest rates. And, in the last week, the price of the currency worsened after the release of data on the Chinese economy.
At around 10 am, Brasília time, the price of the digital currency stood at US$ 29,367 – the lowest value in almost 17 months. The price is the lowest since December 30, 2020 ($29,001), and is far from the highs reached in November last year, when the cryptocurrency topped $60,000.
However, around 4pm, the digital currency was quoted at $29,855, a slight appreciation compared to the morning price of 1.16%.
According to investment specialist Fabio Louzada, the scenario is one of risk aversion, with three factors being decisive for asset price drops: inflation in the US; war between Russia and Ukraine and lockdown in China.
The war in Ukraine and the resulting sanctions imposed on Russia affect the supply chain, making products more expensive. This inflation specifically impacts the United States, which has taken combative measures reflected in raising interest rates, which makes more volatile assets, such as cryptos, a riskier investment.
On May 4, the Federal Reserve (the central bank of the United States) raised the country’s interest rate by 0.5 percentage point, the highest increase in more than 22 years. With that, it became 0.75% to 1% per year. On the same day, the Copom (Monetary Policy Committee) raised the Selic rate to 12.75% per year.
The result of the Chinese trade balance in April, on the other hand, reinforced fears of a sharp slowdown in the global economy and, consequently, generated an aversion to risk, which harms assets considered riskier, such as cryptocurrencies, and favors others seen as safer, such as the dollar – the country’s exports reached the lowest levels in two years.
more reasons
At the same time, Matt Dibb, director of operations at cryptocurrency platform Stack Funds, says that other factors for the decline in the price in the last week – bitcoin closed on Friday (6) around $ 36,000 – were the downturn. crypto market liquidity and also short-lived fears that the algorithmic stablecoin called Terra USD could no longer be pegged to the dollar.
UST is closely watched by the digital currency community, both because of the new way it maintains its 1:1 dollar peg and because its creators have set plans to build a $10 billion reserve of bitcoin to support the stablecoin. , which means that volatility in the UST could potentially spill over into bitcoin markets.
“Think [ainda] that everything inside the cryptocurrency [bitcoin] is still classified as a risky asset, and similar to what we saw with Nasdaq, most cryptocurrencies are under attack,” Dibb said.
The Nasdaq index tumbled 1.5% last week and lost more than 22% year-to-date, hampered by the prospect of persistent inflation forcing the Federal Reserve to raise rates. The Nasdaq was down 2.75% near the close of this Wednesday’s session (11)
*With information from Sofia Kercher and João Malar, from CNN Brasil Business, and from Reuters
Source: CNN Brasil
I am Sophia william, author of World Stock Market. I have a degree in journalism from the University of Missouri and I have worked as a reporter for several news websites. I have a passion for writing and informing people about the latest news and events happening in the world. I strive to be accurate and unbiased in my reporting, and I hope to provide readers with valuable information that they can use to make informed decisions.
