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The crypto asset market, which has been volatile recently, is trying to determine its direction based on the progress of the U.S. presidential election and the Federal Reserve’s interest rate decision.
Recently, the crypto asset market has seen an active period.
Bitcoin, which was trading at $70,000 in late July, began to fall as the Federal Reserve kept its policy rate unchanged and U.S. unemployment reached its highest level in recent years.
Concerns that the country’s economic activity may slow more than expected led to deepening selling pressure.
Bitcoin fell below the $50,000 level last week, though it lost 20% of its value amid fears the U.S. economy was heading for a recession and a sharp drop in global stock markets.
In the following days, crypto asset markets recovered some of their losses as global markets recovered as recession fears eased.
Russia wants a say
Ismail Hakkı Polat, a lecturer at Kadir Has University’s New Media Department, said crypto assets have lost more value than other investment instruments in recent weeks following U.S. recession fears and the Bank of Japan’s (BoJ) interest rate hike.
Noting that the ecosystem has recovered some of its losses, Porat said the U.S. election and the country’s interest rate decisions will have a decisive impact on the market going forward.
Recalling former U.S. President and presidential candidate Donald Trump’s comments regarding crypto assets, Porat made the following assessment:
“Compared to the situation where Trump has been making promises to the ecosystem during the US election, crypto assets may take a slightly better shape in the autumn. Depending on whether Trump is elected or not, it is possible to expect that the magnitude of the Fed’s interest rate cut in September will also be decisive, and “Jerome Powell’s remarks will be important for how many will be held this year”.
Porat noted that Russia has legalized crypto mining, a situation that could contradict Donald Trump’s promise to “make the United States a crypto hub.”
“Russia wants to have a say in the production and governance of Bitcoin and crypto assets. Trump’s ‘we will be the leader in the crypto ecosystem’,” Porat said. “When evaluated with this statement, it can be said that competition between countries may begin, especially in Bitcoin and crypto assets.”
Porat reminded that the crypto asset ecosystem has a high volatility and warned inexperienced investors to guard against risks.
Improved sensitivity
Bora Erdamar, a doctoral faculty member at the Department of Economics at Bahcesehir University, said that the crypto asset market saw $1.02 billion in liquidations on August 5 due to the Bank of Japan’s decision, geopolitical tensions, and concerns about a U.S. recession.
Erdamar assessed that the biggest factor was the increased sensitivity of the crypto asset market to macroeconomic developments following the approval of the spot Bitcoin ETF and the spot Ethereum ETF.
Erdamar stressed that the most anticipated news in the market in the near term is the Federal Reserve’s interest rate cut, and he said the impact of this increase or decrease in expectations will be observed in pricing.
Eldamar drew attention to developments in the United States, saying:
“We are seeing a gentle rapprochement process with the crypto ecosystem, which started with Donald Trump’s US presidential campaign and is now continuing with Kamala Harris’ ‘Harris Crypto’ campaign. Finally, the lower-than-expected penalty in the Ripple case led to an increase in cryptocurrencies on the US side,” he said. “If geopolitical risks do not increase, expectations of rate cuts from the Federal Reserve and the campaigns of crypto-friendly US presidential candidates may reflect cautious optimism in the market.”
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