Bitcoin, the world’s leading cryptocurrency, suffered its largest percentage drop since August last week, plunging 8.8% to nearly $95,000. This slump coincided with the Federal Reserve indicating fewer rate drops next year and confirming that it is prohibited from holding Bitcoin. Andre Dragosch, director and head of research Europe at Bitwise, advises investors that we may likely see further losses in the coming weeks, but the dip could present significant buying opportunities.
The depreciation was not confined to cryptocurrency markets alone, with the S&P 500 recording a 2% drop, and the risk-free lending rate (10-year Treasury note) rising by 14 points. The Federal Reserve’s hawkish stance has sparked uncertainty, nurturing fears of greater volatility in weeks to come. Dragosch laments that the Fed finds itself between a rock and a hard place, with financial conditions continually tightening despite three consecutive rate cuts since September.
Despite the upheaval, Dragosch—who correctly predicted a major price rally for Bitcoin in July, maintains his bullish perspective on Bitcoin over the long term. Highlighting the ongoing Bitcoin supply deficit, he suggests that the coming weeks could present an opportune moment to invest.
However, inflation pressures within the U.S. economy are leading some to draw comparisons with the 1970s rollercoaster. The recent sticky CPI increases have raised concerns at the Fed, provoking a more cautious stance on rate cuts to avoid a sharp acceleration in inflation.
Ultimately, Dragosch believes that the hardship induced by escalating yields and the dollar index will force the Federal Reserve to take action. Maintaining his belief in Bitcoin’s supply scarcity as a key bullish factor, he stands firm in his support of the leading cryptocurrency in the long run.