The cryptocurrency market has been trading flat for the past week, despite the major cryptocurrencies trading in the red. The market cap stayed above $1 trillion. However, major digital tokens like Bitcoin and Ethereum fell over 3.5 percent.
As of 4 p.m. Friday, Bitcoin had the highest market cap, trading at $23,157, over 3.6 percent down from seven days ago. In the last 24 hours, however, it has gained more than 1 percent.
Ethereum, the second largest cryptocurrency, was trading at $1,661, up 2.27 percent in the past 24 hours. In the past seven days, however, it is down 3.7 percent.
On Friday, the Reserve Bank of India (RBI) hiked the repo rate by 50 basis points to 5.4 percent in a bid to control rising inflation. In India, inflation has been above the upper tolerance limit of 6 percent for six months.
However, according to experts, the rate hike by the RBI is unlikely to affect crypto prices in India.
“RBI’s MPC meetings on a standalone basis have had very little or no impact on global cryptocurrency markets. Historically, bitcoin prices have always reacted to US FOMC meeting outcomes.” Jaikrishnan G, Partner, Financial Services Consulting, Grant Thornton Bharat said.
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He continued, “At the macro level, all major economies have been raising interest rates recently to control inflation and this will have a negative impact on crypto prices in the near-term.”
Experts are still ringing the bells of caution
Global inflation has remained high. Even after cooling off slightly, commodity prices have not reached the same level as six months earlier. Experts believe investors must remain cautious.
“We expect range-bound movement in the crypto market, but anything negative regarding inflation, recession or regulatory issues could weigh on sentiment and trigger another sell-off,” said Dileep Seinberg, Founder and CEO of crypto bill payment and utility platform MuffinPay, said.
On Thursday, Britain’s central bank, the Bank of England, raised interest rates by the most in 27 years to 1.75 percent. It warned that the country would enter a recession by the end of 2022 and last until the end of 2023.
On July 27, the Federal Reserve (Fed) also raised its key interest rate by 75 basis points. The country’s GDP has contracted for the second quarter in a row, with inflation exceeding 9 percent.
“Over the next few weeks, given sentiment for rate hikes above expected lines going forward and the need to give growth a boost, markets will consider the macro environment and we are seeing strong consolidation at key support prices,” the CoinDCX research team told Business Default.
However, some experts remain optimistic about the future of cryptocurrency in India.
“While overall cryptocurrency prices have remained flat, there seems to be some flexing in the coming weeks,” said Raj A. Kapoor, Founder and CEO of India Blockchain Alliance, “I truly believe crypto will be net positive in 2022 will be because any short falls due to rate hikes will be offset by greater acceptance of this asset class by institutional and active retail traders.”