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Highlights
- The $500 billion unrealized losses facing US banks are causing a gloomy cryptocurrencies price prediction.
- Bitcoin, Ethereum, XRP, Cardano and most altcoins have been trading lower due to macroeconomic fears.
- The Fed's decision on interest rates later this week could trigger market volatility.
Cryptocurrencies remain in bearish territory, with Bitcoin price teasing a sub-$80K drop ahead of the Federal Reserve’s decision on interest rates. The unrealized losses of US banks have also soared to $500 billion, fuelling market fears. As macroeconomic factors weigh on the market, is the cryptocurrencies price prediction bullish or bearish? Let’s explore.
Cryptocurrencies Price Prediction Amid $500B US Banking Loss
A looming crisis in the US banking sector shows a bearish cryptocurrencies price prediction. Market analyst Stefan Rust identified the hidden insolvency risk after unrealized losses ballooned to $500 billion. These losses stem from rising interest rates and the Fed’s hawkish monetary policy.
US banks hold $4 trillion in government bonds purchased between 2020 and 2022 when interest rates were around 1%. Bond prices tend to move inversely to interest rates. Therefore, as the Fed hiked rates aggressively, the older bonds lost significant market value, causing $500 billion in unrealized losses.
If US banks sell these assets and realize the losses, it could trigger another banking crisis as seen in 2023 when Silicon Valley Bank collapsed. This will lead to a steep decline in cryptocurrencies price.
During this week’s FOMC meeting, 99% of investors on CME expect that the Fed will leave rates unchanged at 4.25% to 4.50%. Therefore, US banks will continue facing a risk of insolvency until the Fed ends Quantitative Tightening and returns rates to 1% or less. Such a move will boost crypto prices.
Analysts Share Mixed Predictions on Crypto Prices During FOMC Week
The macroeconomic fears have led to mixed market predictions on cryptocurrencies price. Bitcoin trader @21_XBT attributes the weak BTC price moves to short-term macro fears. Once these concerns die down, Bitcoin’s long-term fundamentals like institutional adoption will drive price recovery.
Likewise, crypto analyst Seth notes that the global money supply is rising as other central banks ease monetary policies. Bitcoin and most altcoins will likely follow this trend and rally higher.
However, CryptoQuant CEO Ki Young Ju predicts that cryptocurrencies have entered a bear market. He noted that the Profit and Loss Index Cyclical Signals forecast that now is the right time to sell.
Ju’s bearish cryptocurrencies price prediction may be proven true later this week if selling pressure rises later this week if the Fed maintains its hawkish policy.
What’s Next for Altcoins?
Altcoin prices have been hit the hardest amid the bearish trends in the cryptocurrencies market. The gradual decline has pushed the altcoin season index to 29.
Ethereum price has been trading below the $2,000 support level for more than a week. As Coingape reported, Standard Chartered has shared a bearish ETH price prediction as it loses its market share in the cryptocurrencies market. The institution has also slashed its Ethereum price target by 60%.
Despite Ethereum’s grim outlook, other top altcoins like XRP and Cardano still show positive momentum. Ripple has formed a double-bottom, with analysts forecasting an XRP price rally to $30.
On the other hand, Cardano price could see an independent rally later this month despite the results of this week’s FOMC meeting. This is due to the launch of ADA futures on Coinbase.
Summary of Cryptocurrencies Price Prediction
Cryptocurrencies are facing intense price volatility this week. The FOMC meeting and the Fed decision on interest rates will impact investor sentiment after aggressive rate hikes caused $500 billion in unrealized losses for US banks.
Bitcoin price is teasing a sub-$80K drop while Ethereum faces rejection at $2,000. However, other altcoins like XRP and Cardano could post massive rallies if macro fears ease.
Frequently Asked Questions (FAQs)
1. How will US banks $500B unrealized losses affect cryptocurrencies price prediction?
2. How will the Fed's decision on interest rates impact crypto prices?
3. Will Bitcoin price drop below $80,000?
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