The Capital
Published in

The Capital

A Few Catalysts to Why the Crypto Market is Falling

Learn about the largest news on the current state of the economy and crypto

Photo by Markus Spiske on Unsplash

It is no doubt that the cryptocurrency market has seen a rough start in 2022. This article will cover some main topics of interests that contributes to both the US economy as well as the crypto market itself.

1. Inflation Data + Hawkish FED

Unless you have been living under a rock, you have definitely heard talk about inflation from friends, family, or the news. Why is inflation so important? To put it in simple terms, most Americans don’t like it when prices of normal everyday goods increase. And with record-breaking inflation rates coming out, this is by no means a positive catalyst. Additionally, Jerome Powell has been overall very hawkish in each FOMC meeting. With his hands tied down, looking to fix the current inflation crisis, there are not many choices to be made.

If the FED was pumping money into the economy like they were back with Covid-19 hitting at full force, a lot of these issues would not necessarily be issues.

This impact is clearly seen with every FOMC meeting that premiers.

YTD of BTC/USD Chart

The blue arrow represents the “money printing” shut-off.
The orange arrows represents each FOMC meeting.

TLDR; Inflation has hit all time highs, Jerome Powell has consistently been extremely hawkish in each FOMC meeting. This is a big player in the crypto market as well as the economy itself.

2. Inverted Yield Curve

An inverted yield curve describes the unusual drop of yields on longer-term debt below yields on short-term debt of the same credit quality. — Investopedia

The key takeaway with this point is that the inverted yield curve historically “predicts” recessions.

The last major recession the US experienced was in 2008, known as the “Great Recession.” During a recession, you will likely not see most assets/investments pumping and “going to the moon.”

Image Credits

Basically, the inverted yield curve has recently “flipped,” indicating the possibility of an incoming recession and this is by no means positive news for the economy or markets.

3. Severe Lockdowns in China

If you have watched any news regarding Covid, you surely will have passed by the current state of China and, specifically, Shanghai.

As you are able to see, this populous city is completely barren, and if you continue to read throughout the thread, you will see that many citizens are clinging onto life with the strictly enforced rules of the government. One of the biggest effects of this is the

Now why should someone like you or I care? China is huge exporter of many US goods.

With clear supply-chain issues arising, this can easily result in a shortage of exports coming out of China which will directly impact countries that rely on China (aka the United States). If these shortages were to happen in the US, this will result in pure havoc and insanity. News like this is extremely impactful on the economy of the United States, resulting in direct affects to the crypto markets.

4. Potential Real Estate Bubble

As many of you may have noticed, real estate prices are going absolutely nuts. With many Americans around the country looking for homes, there is no question that there is a “bubble” around the current state of the market. When was the last time we saw something like this? The 2007 stock market crash.

Now this on its own is not necessarily “impactful” on the price of cryptocurrency, however, the effects of the “bubble” popping will have a huge effect on the entirety of the US economy. This is definitely something you all should be keep an eye out for.

Hope this article was useful in your understanding of the current economy of the United States. Please note that it is always important to do your own research on individual topics and that none of the points made in this article is financial advice.

--

--

--

A publishing platform for professionals in business, finance, and tech

Recommended from Medium

3 signs of crypto market maturation

Understanding bitcoin returns and diversifying your portfolio

RECAP New Year Live AMA with Nam Nguyen — ByteNext CSO

Trading bitcoin to USD: what to know

What is ICO and how to launch a Successful ICO Platform?

Newsletter, 24th of May

EOS Whales Accumulate in Preparation for a Major Price Movement

Monthly Recap — June 2021

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Tyler

Tyler

Student — Entrepreneur — Writer

More from Medium

4 Things That Need to Happen for Bitcoin to Reach $1 Million (By 2030)

The integration of the Internet Computer blockchain with Bitcoin is nearing completion

The Engineering of Bitcoin

The bitcoin standard: A rising economy.