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Coin Bureau, host of the popular YouTube channel, believes that rising interest rates as a result of the Federal Reserve’s actions could have a devastating effect on cryptocurrency prices.
pseudonymous analyst known as Guy Warning His 2.1 million YouTube subscribers say the Federal Reserve will accelerate the sale of assets made up of US Treasuries and mortgage-backed securities starting this month.
Guy said selling could have a serious impact on interest rates.
This is because interest rates on U.S. Treasuries and mortgage-backed securities are fundamentally determined by price, with lower prices resulting in higher interest rates. has sold billions of dollars in assets, it is unclear whether there will be enough buyers to absorb the shock, meaning prices will fall.
This means that interest rates could rise faster than investors can handle, further plunging the market. This is exactly what happened when the Fed started shrinking its balance sheet in 2018. “
In 2018, the S&P 500 lost about 20% of its value from its then peak of 2,940 points.
The Coin Bureau host stresses that a repeat of what happened back then could cause problems for digital assets.
Given that cryptocurrencies are highly correlated with more volatile stock markets, this is a 40% drop for the largest coins and tokens, and a 60% or 80% drop for most mid- and small-cap altcoins. It could be equivalent to a decline of , around the beginning of next year.
The Coin Bureau host says Bitcoin (BTC) has the least price impact compared to altcoins.
If history shows, Bitcoins BTC will suffer the lowest percentage losses as it turns the profits left by altcoin holders into virtual digital gold. It could be more than most cryptocurrency holders can bear.
At the time of writing, BTC is trading at $19,950, flat on the day.
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Featured Image: Shutterstock/Tithi Luadthong/Natalia Siiatovskaia
