Bitcoin has been struggling to stay above the $20K support level for a while now. On late Sunday, it finally dipped to $19,526. It has dipped more than 2% over the past 24 hours. Ethereum had also dropped to $1, 423 which was a decline of over 4%.
Fed Chair Said The Objective Is To Lower Inflation
This drop has been attributed to investors’ reaction to the fed chair Jerome Powell’s remarks on Friday. He declared the Fed Reserve would not stop the tough regulatory stance the institution has been taking this year. The Fed Chair said this aims to increase price stability and reduce inflation to 2%. He added that the restrictions would loosen once the government agency has achieved these goals.
Some investors were dissatisfied by this news because they were expecting that the Fed would do the opposite and show that it’s positive that its monetary restrictions for the past several months are bearing fruits. Therefore, it has managed to reduce inflation and will now stop its latest interest rate increments of 75 points.
Many other cryptos have been in the red zone in the recent past. ATOM and AVAX have declined by over 5%, but XMR shot up by almost 1%.
In the meantime, Jordan Belfort, a former stockbroker famously known as the “Wolf of Wall Street,” said crypto assets with low market capitalization values are the same as penny stocks because of their high price volatility. Penny Stocks mean shares that cost less than a dollar belonging to small and obscure companies. The shares are also prone to high speculation.
Penny Stocks Are Very Predictable
Overall, they are known to do two things; earn high returns or incur significant losses. Belfort became famous in the 1990s and even worked at the Securities and Exchange Commission (SEC) partly because of trading these stocks. When Yahoo Finance interviewed him last Saturday, he said that such investments are easy to predict since they have a similar cycle that can create big profits but can hurt investors who cannot take their profits and exit the market at the appropriate time.
He also noted that you could lose your money when investing in these assets most of the time. He suggested that people only buy low-cap crypto coins if they are prepared to set aside some of their portfolios and dedicate them to high-risk assets. He added that such investment should never be classified as a serious investment.
Belfort also observed that researching the low-cap crypto assets cannot help you shield yourself from losing your money, and the best thing to do is to enter as early as possible. He asserted that regardless of the nature of the management in charge of the asset, the most likely thing that will happen is the price will go up, and when it reaches a certain point, people will sell their low-cap assets, and the price will plummet.
Bitcoin Could Be A Great Store Of Value In The Future
He also considers Bitcoin and Ethereum as possible long-term investments. He is especially eying Bitcoin. In the future, it can be an excellent inflation hedge and store of value because it will have matured. At the moment, Bitcoin is still a growth stock, according to him.
Belfort was one of the most prominent Bitcoin critics. In 2018, he speculated that the price would eventually drop to zero. Recently, he has explained his sudden change of heart about the coin by saying he thought the U.S regulators would ban it as it happened in China. But now he understands it won’t be banned entirely and pushed out of the market. Additionally, the increasing Bitcoin and crypto adoption also made him change his mind.