Monetary Policy and industry risks weigh on crypto

Sentiment deteriorated further in cryptocurrency markets while global and industry-specific developments eroded confidence further. Price expectations could be revised down across all cryptocurrencies due to monetary policy concerns and a new incident involving a crypto-focused bank in the US.

Overall, sentiment could be weighed down further by the increasing fears of seeing interest rates move higher for longer. US data continues to support a tighter monetary policy while Federal Reserve members seem to turn to more hawkish comments during their recent interventions. In this regard, they could support the idea of larger interest rate hikes in the coming meetings to fight inflation that remains largely above the central bank’s target. Federal Reserve members seem to prefer the idea of tightening sooner rather than later.

Against this backdrop of monetary policy concerns, fears are growing that a crypto-focused bank failure could constitute a new hit to investors’ confidence after the bankruptcies of major crypto players during the last few months. As a result, the market could be exposed to new price corrections while investors could be concerned about a potential impact on other market players.

This incident could strongly dent the market’s recent rebound as cryptocurrencies remain in a delicate position. Additionally, the dwindling number of companies operating in crypto could add to the concerns.

In the meantime, traders could remain vigilant to the developments surrounding major crypto companies to determine the strength of the market and evaluate any new risks.