Cryptocurrency market will not recover while the U.S. Federal Reserve and the ECB raise rates

The expert explained why central banks in the U.S. and the euro area will eventually have to lower interest rates.
At present, the inflation tsunami that has hit the U.S. and eurozone economies has led to the U.S. Federal Reserve and the ECB deciding to sharply tighten monetary policy. In the U.S., the growth of the cash supply has stopped, and the regulator is selling U.S. government bonds and mortgage-backed securities.
Further hikes in the benchmark interest rate are planned, all in an effort to bring inflation to the 2% target. The ECB is also preparing to take the interest rate to the plus side instead of the current zero.
Such policies by the U.S. Fed and ECB, as long as they continue, will contribute to finding market cryptocurrencies in a “bearish” phase – this opinion was expressed by expert Lyn Alden. She believes that the central banks of the U.S. and the euro area will continue to raise rates for some time, and even for a longer period than previously assumed.
In the end, however, this policy will lead to a sharp drop in consumer demand due to higher borrowing costs and ultimately to an economic slowdown. This will be a turning point for the U.S. Federal Reserve and the ECB, when both regulators will start lowering interest rates, which will be a positive moment for the cryptocurrency market.
Lyn Alden also believes that the U.S. Fed and the ECB are mistakenly assuming that they will “moderate” inflation by raising interest rates. In her view, which echoes the views of Professor Steve Hanke on CNBC, the reason for high prices in the U.S. and the eurozone lies not in the money supply, but in supply-side problems, that is, difficulties in global logistics that have their roots in the beginning of the COVID-19 pandemic.
This mistake will also be evident in the U.S. Fed and the ECB, which will be another incentive to start cutting interest rates. Furthermore, Alden said that US and eurozone central banks will not be able to maintain positive interest rates for long because of the high level of sovereign debt.

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