The mainstream digital currencies including Bitcoin, Ethereum (ETH), and Solana (SOL) amongst others will always be pitched as relieving assets that can partially serve as a hedge against inflation.
The broader digital currency ecosystem is seeing a slightly bearish slump today with the combined digital currency market cap down 3.20% to $1.01 trillion. The fall is notably being led by Bitcoin (BTC) whose price has shifted from its previous weekly high of $24,196.82 to its current level at $21,921.82.
With the current performance, Bitcoin has dropped exactly 3.53% in the past 24 hours, a slump that has notably pared off the gains it has accrued over the past week.
This slump in the price of Bitcoin which has trickled down to the industry at large is antagonistic to the Chicago Board of Options Exchange’s volatility index (VIX).
The VIX index notably slips 22.41 in early Asian hours This index is renowned as Wall Street’s fear gauge for Bitcoin and it is currently trending downward, implying investors are not particularly jittery when it comes to the impending sell-off of Bitcoin in the near term.
This in itself is a surprise as the United States Federal Open Market Committee (FOMC) meeting is scheduled for Wednesday. At the meeting, the Fed is projected to raise the interest rate by 100 basis points in its committed bid to fight inflation as best as possible. An interest rate hike move is known to naturally fuel a slump in the price of risky assets in the days leading to the meeting.
“With the VIX at 23, it is currently at its lowest level this year, heading into an FOMC meeting, which I find bizarre,” Michael Kramer, the founder of Mott Capital Management said with a warning that investors should be cautious as this trend is antagonistic to the norm.
“This complacency may be happening because the market has convinced itself that the Fed is close to pivoting, caving in, and going back to its old ways of supporting asset prices,” Kramer noted. “This week’s meeting may change the market’s mind on how serious the Fed is regarding its battle against inflation and that it doesn’t view the economy as weak or heading for a recession.”
Bitcoin and Crypto as Mild Hedges Against Inflation
While inflation has continued to grow with the June figure pegged at a 40-year high of 9.1%, the Federal Reserve officials are obligated to continue to step in in a bid to return the figure to its projected range of around 2%. With the continuous rate hikes, analysts believe the economy might eventually slip into a recession in which the Fed’s efforts in producing the exact opposite of the expected result.
The mainstream digital currencies including Bitcoin, Ethereum (ETH), and Solana (SOL) amongst others will always be pitched as relieving assets that can partially serve as a hedge against inflation. While experts are likely projecting that the worst onslaught on the nascent industry may be over, caution is still the consensus warning as an unexpected headwind may be well ahead.
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Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
Source: https://www.coinspeaker.com/bitcoin-slumps-fomc-meeting/