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The Fed is forcing markets to 'flush' crypto speculators: Strategist

·Anchor, Editor-at-Large
·2 min read
In this article:
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Despite the rise of digital currencies, the Federal Reserve has shown the crypto markets who's boss and who will stay boss well into the future.

"What the Fed is forcing the markets to do is flush out all areas of froth," iCapital Chief Investment Strategist Anastasia Amoroso said on Yahoo Finance Live (video above) "I am not calling all areas of crypto froth, but in a market that continued to trend up there were structures upon structures and derivatives upon derivatives that built up on average coins. So it's starting a flush out in very important parts of crypto. I think that is a good thing."

A man poses next to a Bitcoin logo during the Bitcoin 2022 Conference at the Miami Beach Convention Center in Miami Beach, Florida, on April 7, 2022. (Photo by CHANDAN KHANNA/AFP via Getty Images)
A man poses next to a Bitcoin logo during the Bitcoin 2022 Conference at the Miami Beach Convention Center in Miami Beach, Florida, on April 7, 2022. (Photo by CHANDAN KHANNA/AFP via Getty Images)

The Fed seems to have darn near broken the back of the crypto market in the past two months amid a tougher stance on inflation-fighting via interest rate increases.

Bitcoin prices fell below $22,000 this week in a broader flight to safety in markets. The total value of the crypto market plummeted to below $1 trillion, from roughly $3 trillion in late 2021.

Crypto-centric stocks such as Coinbase, RobinHood and Microstrategy continue to be hammered.

Coinbase, which is owned in by Wood's flagship Ark Innovation ETF, recently froze hiring and announced the the crypto trading platform would layoff 18% of its workforce.

The flushing of the speculators calls into question the common rallying cry that bitcoin will hit $1,000,000 by 2030 — or even whether it's worth buying the currtent crash.

"No," 22V Research founder Dennis Debusschere said on Yahoo Finance Live when asked if now is a good buying opportunity into the beat-up crypto space. "We are in an environment where the Fed is tightening financial conditions, and in a tighter financial conditions backdrop speculative assets like bitcoin are going to get hit."

Debusschere added that bitcoin "has not done the job of hedging like it was advertised to do."

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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