Yahoo Finance reporter David Hollerith explains how previous Fed rate hikes have impacted bitcoin and other crypto markets, along with how the interest in NFTs is waning over time.
DAVE BRIGGS: Welcome back. Since hitting highs in November, the tech-heavy NASDAQ is down more than 20%. Bitcoin, however, is down double, more than 40%. And fears are the Fed will make matters worse this week when it raises rates an expected 50 basis points. David Hollerith covers the space for us and he joins us more. David, why could this be a very bad week for Bitcoin?
DAVID HOLLERITH: Yeah. You know, I think Bitcoin largely is being seen as a risk asset. And for the last year or so, it serves as a bellwether for the crypto sector more broadly. In some ways, it’s one of the safest in terms of how volatile it is. And it’s expected sort of to continue its high correlation with risk-on assets, which is most often seen in the NASDAQ.
But it’s sort of all correlating around this event. So the US central bank’s policy decisions have been one of the most important drivers of the market. Now, that being said, analysts and traders aren’t expecting market-shaking moves in crypto tomorrow– the main reason being that the market has sort of known about this rate hike for the past month.
So if expectations are maintained, there won’t be such a dramatic drop. That being said, talk of a taper tantrum or maybe more dialogue around what a potential balance sheet runoff could mean could send risk assets, Bitcoin especially, down below its previous lows. So Bitcoin’s sitting around $37,600 per coin right now.
And I think a lot of the anticipation is that, like all other risk assets, it’ll continue to sort of lose or subside, deteriorate, in value. But I think there is strong resistance around the $30,000 mark.
SEANA SMITH: David, while we have you, we also want to get your take on a story that was in the “Journal” this morning– it certainly is getting a lot of buzz. They’re talking about the NFT market. They said that it was flat-lining.
The first line in the article says the NFT market is collapsing. What’s your take on this?
DAVID HOLLERITH: Well, yeah, I mean, it’s pretty confusing. I mean, I think that, first, the story is completely correct in its assessment of the market. But I think one thing to remember is that the NFT market varies a lot in terms of what kind of assets you’re talking about. So just some things I’ve seen is gaming asset– gaming NFT assets and art NFT assets are not doing so hot.
But social NFTs, particularly stand out projects like Moon Birds and the Bored Ape Yacht Club, have seen a lot of volume traded lately. I mean it’s actually interesting– Bored Ape Yacht Club had sort of a record sale for virtual real estate over the weekend. And that ended up leading to OpenSea, the largest NFT marketplaces platform, the largest daily trading that the marketplace has ever seen.
So I think the key thing to look at is sort of whether or not new buyers are coming in. And from what we’ve seen, they’ve not been, especially compared to last year. So that’s sort of the main thing to look at.
But when you say something like the whole market is going down, it’s not necessarily the case. There are standout projects that are still moving ahead and, in some ways, making it look, in terms of volume, like the market altogether is moving up. So it just goes to show it’s still a pretty small market that’s mainly run by returning buyers at this point.
SEANA SMITH: All right, David Hollerith, always great to get your take. Thanks so much for joining us today.