By Swann Collins, investor, writer and consultant in international affairs. Eurasia Business News, January 11, 2022
Bitcoin gained 2% on January 11, reaching $ 42,702, after its historic fall below $ 40,000 on Monday, January 10. The famous cryptocurrency suffers from a lack of appetite from investors, who are worried as the US Federal Reserve started to tighten monetary policy.
Ethereum rose by 5%, to $ 3,226. The second largest cryptocurrency benefits from the fact that it is the most used blockchain for the sale of NFT, these non-fungible tokens that are virtual certificates registered on a blockchain. NFT make it possible to identify a digital work, ensure its property rights and sell it on a marketplace, like a digital art-object. The NFT market is promising and already weights several billions dollars.
Bitcoin had benefited at the end of 2020 and in 2021 from the flow of liquidity that watered the markets due to the very extensive monetary policy of the US Federal Reserve and of the European central bank. The prospect of a tappering, to counter high inflation, weighs on bitcoin, as on the world stock markets.
Read also : Why cryptocurrencies can help liberal democracies
Some investors also consider that a quality of bitcoin, its supply limited by the algorithm that regulates its issuance, makes it a safe haven against inflation, a kind of digital gold, which would therefore be less attractive if central banks tighten monetary policies. But we don’t think that quantitative easing will end soon in Europe and in the U.S., as the real estate bubble and the high state debts need extensive moneteray policies to avoid bursting. In spite of high inflation, central banks and goverments can’t afford a reduction of liquidity in the markets. Therefore, the market of cryptocurrencies should soon come back to growth.
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