Bitcoin and other altcoins continued falling on Wednesday.
The US dollar index continued rallying as crude oil price jumped.
There are signs that the Fed will continue hiking rates.
Bitcoin Cash, Stacks, Neo, Solana, and Stellar lumens price drifted downwards as a sense of fear engulfed the financial market. Most of these coins dropped by more than 3% on Wednesday as demand remained significantly low.
The main catalyst for the sell-off was the recent trends in the energy market. Brent, the international benchmark, surged to over $90 per barrel. It has soared by over 25% from the lowest level in June and some analysts see it rising to $100 in the coming weeks.
The rising oil prices mean that the Federal Reserve could maintain its hawkish tone in the coming months. Economists have a mixed feeling about what to expect. Some of them expect the bank to hike rates by another 0.25% this month and push them to 5.75%.
Other analysts believe that the Fed will leave rates intact as officials wait for more details about inflation. This view was supported by Christopher Waller, one of the most hawkish Federal Reserve officials.
The rising expectation of another Fed hike has pushed many investors to the safety of the US dollar. Data shows that the dollar index has surged to more than $104, the highest level in more than five months.
As I wrote in this article on Tuesday, cryptocurrencies tend to have an inverse relationship with the US dollar. In most periods, coins like Bitcoin and Ethereum tend to retreat when the DXY index is soaring.
Solana and Stellar prices retreated even after a dose of good news from Visa, the biggest fintech company in the world. In a statement on Tuesday, the company said that it would expand its USDC expansion to Solana’s ecosystem. Solana is known for its fast speeds and low transaction costs.
Visa hopes to use this technology in its business of processing billions of dollars every day. This news impacted Stellar because USDC is built using its technology.
The outlook of Bitcoin and other altcoins is relatively bearish for now since there is no major catalyst in the near term. A likely catalyst will be the eventual acceptance of a Bitcoin ETF by the SEC. This is highly likely now that GreyScale won a major lawsuit last week.
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Binance has grown exponentially since it was founded in 2017 and is now one of, if not the biggest cryptocurrency exchanges on the market.