Binance CEO Changpeng Zhao recently stated that Bitcoin could stay below its historical high of $69,000 for the next two years after the digital currency slumped below $20,000. Inflation is said to be one of the major factors that have hit the crypto market which prompted interest rate rise by central banks.
Chanpeng disclosed that crypto traders would have been happy four years ago, had they been told that Bitcoin would be trading at $20,000 in 2022.
In his words, “I think given this price drop from the all-time high of 68k to 20k now, it will probably take a while to get back. It likely will take a few months or a couple of years. 20k we think is very low today, but you know, in 2018, 2019, if you told people Bitcoin will be 20k in 2022, they would be very happy. In 2018/19, Bitcoin was $3,000, $6,000”.
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Analysts have disclosed that the crypto market has been increasingly tracking the stock market lately, which makes it even more intertwined with macroeconomic factors.
Cryptocurrency and stock prices are somewhat correlated after they account for the cryptocurrency’s volatility. In the previous decade, Bitcoin never had any correlation with the broader economy which many investors saw as an alternative advantage to store currencies against inflation.
It used to be a haven for a lot of investors who wanted to avoid the turmoil that affected the stock market. Bitcoin back then was often seen as a good hedge against inflation as it has on countless occasions been unperturbed by inflation.
Despite claims from different investors referring to cryptocurrency as an inflation-resistant asset, unfortunately, the crypto market has become complicated that amid the inflation, the crypto market has not been favorable lately.
The carnage happening in the crypto market lately has been predicted to be partly caused by pressure from macroeconomic forces, which include the high inflation rate and federal hikes.
The bearish market saw a lot of crypto trading platforms laying off their staff, which saw coin base, the largest crypto exchange in the U.S lay off nearly a fifth of its workforce. These companies have been looking for ways to cut costs, also a large number of investors have pulled down large trading volumes.
Cryptocurrencies lately have not been immune to the inflation rate, since Bitcoin reached an all-time high in November 2021, its value has fallen by about 70%. Bitcoin has shown that it is not immune to certain macroeconomic forces, because changes in interest rates lately have affected the crypto market.
With the Fed continuing to aggressively increase the interest rates, there is likely to be more crashes not only across all markets, but also the crypto market. Will Bitcoin continue to stay below its historical high of $69,000 for the next two years as predicted by Binance CEO, or will the market experience a possible bull run? Only time will tell.