Cryptocurrency markets are known for, and criticized (by some), for their volatility, and a case in point is the sharp drop in prices over the past 12 hours or so, leaving behind nearly $1 billion in liquidations. .
Bitcoin was one of the least affected assets, with its price falling from about $71,000 to about $65,000 before recovering to about $67,000.
Volatility across all markets
However, the altcoin fell sharply, posting double-digit declines multiple times within hours. But price declines were also evident in more mature industries like the U.S. stock market, with the S&P 500 falling from above 5,210 to below 5,100 in a matter of minutes, as well as the Dow Jones Industrial Average and Nasdaq Composite.
Even gold, perhaps the asset best known for its stability and lack of volatility during the crisis, fell 4% to $2,333 from its all-time high of $2,433 in a matter of hours.
Prior to that, the precious metal was doing great, especially since it decisively broke above $2,000 earlier this year. Geopolitical tensions in Europe and the Middle East prompted further gains, but Iran's participation led to a significant price increase, pushing gold to the aforementioned all-time high against the dollar.
However, all markets appear to have been affected by the latest comments from various US Federal Reserve officials. Federal Reserve Bank of Atlanta President Rafael Bostic and San Francisco President Mary Daley were among those who predicted a delay in the central bank's potential shift from current monetary policy.
Both bank managers were quick to refute rumors that the Fed would begin lowering interest rates soon. “There's still a lot of work to do,” Daly said, adding there was “absolutely no” urgency to cut rates.
Virtual currency market outlook
While such comments should certainly cause volatility in high-risk markets such as cryptocurrencies and Wall Street, gold should actually be avoided. Furthermore, given its safe-haven status, such comments could cause its price to rise against the dollar.
However, the dollar actually appreciated against other currencies. Because, at least in theory, higher interest rates mean fewer loans and less cheap money.
Despite this, the cryptocurrency market is still in the red on a daily basis, although it has recovered to some extent since last night's lows. After all, at one point more than $250 billion was drained from the market within hours, but there are some encouraging signs for the coming weeks. Most importantly, Bitcoin's halving is scheduled in the next few days, an event that, at least historically, has been hailed as the catalyst for a new bull market.
