Market News

BitcoinBTC 0.0%, ethereum and crypto prices have been falling steadily over recent months as confidence evaporates following the Federal Reserve warning it's "deeply concerned."

The bitcoin price, after rocketing higher at the beginning of the summer, has lost all the gains it and the wider ethereum and crypto market made—despite an SEC insider calling a $15 trillion bitcoin earthquake "inevitable."

Now, as the bitcoin, ethereum and crypto market teeters on the edge of its $1 trillion market capitalization, crypto services provider Matrixport has warned a further "price crash looms."

"In the absence of a new bull market, there are only a few critical factors we need to consider to accurately predict the direction of crypto prices, which consist of macroeconomic conditions, liquidity, regulatory developments, and valuation," Markus Thielen, head of research and strategy at Matrixport, wrote in an emailed note, adding he has "consistently raised concerns about the fragility of the crypto markets."

The bitcoin and the crypto market's recent gains were largely driven by BlackRock'sBLK +0.8>#/span### landmark spot bitcoin exchange-traded fund (ETF) filing in June, followed by XRPXRP 0.0% developer Ripple's and crypto asset manager Greyscale's legal victories over the U.S. Securities and Exchange Commission (SEC).

"While there may be some beta-related spill-over into other cryptocurrencies once a Blackrock ETF is approved, the fundamentals remain impaired for the non-bitcoin crypto universe," Thielen wrote.

Thielen also pointed to the upcoming FTX creditor liquidation that could see $3.4 billion worth of the collapsed exchange's crypto sold by year-end, with $200 million worth of various cryptocurrencies being offloaded onto the market every week.

"[The FTX sales are] a potential liquidity gap that might be hard to fill in the absence of Signature Bank, Silicon Valley Bank, and Silvergate Bank, which were responsible for at least, 50% of all the fiat-to-crypto on-ramping during the last few years," Thielen wrote, noting "crypto venture capital funds are also under immense pressure to return funds to their investors," piling on downward pressure.

However, other bitcoin, ethereum and crypto market watchers are more upbeat, with one analyst pointing to the potential for the Federal Reserve to end its tightening cycle in the coming months as a bullish signal.

"The end of rate hikes, especially if combined with approval of a spot bitcoin ETF, could represent a major driver to bring new capital into the market and improve liquidity," Matteo Greco, research analyst crypto investor Fineqia, said in emailed comments.

Fed officials have signaled they think they're close to winning the post-pandemic war on soaring inflation but they've also warned that even if they take a breather this month, it may not mean the end of the tightening cycle.

"At this stage, I believe we must proceed gradually, weighing the risk that inflation will be too high against the risk of dampening the economy too much," Federal Reserve Bank of Dallas president Lorie Logan said in a speech last week.