Digital currency markets are once again going through a period of increasing volatility. In the last two weeks, the fluctuation has shown itself twice. The promising growth was immediately replaced by a sharp decline.
Cryptocurrencies react to stock markets
It is already quite standard that cryptocurrencies copy the course of trading on the stock markets and react sensitively to changes in the expectation of the development of central banks’ interest rates. Cryptocurrencies received another blow in this regard after the August inflation data was published in the US. Investors suddenly began to expect a much higher increase in interest rates from the Federal Reserve System than before.
Stocks and especially cryptocurrencies subsequently experienced a sharp decline. Bitcoin traded above 22 thousand dollars at the beginning of the previous week, after which it gradually fell to below 20 thousand. During the weekend, he erased some of his losses, but he was far from returning to his original levels.
Ethereum also tanked
A similar development also occurred with the second most widespread cryptocurrency, Ethereum. Its value rose to nearly $1,800 early last week, only to fall to $1,400 in the following days. Given that the policy of central banks in the coming weeks will most likely primarily respond to the current development of inflation, cryptocurrency markets will find themselves on the swing more and more often.