Bitcoin’s value has dropped back from its all-time high, plummeting toward $90,000 per bitcoin, amid a worrying development in the global money supply. A financial analyst has warned that a potential price crash of $20,000 could be triggered by a possible shift in monetary policy.
The Federal Reserve’s efforts to control inflation and interest rates are weighing on the crypto market. Analysts have pointed out that, historically, bitcoin prices have followed changes in the global money supply with a lag of around 10 weeks. With the money supply dropping by $4.1 trillion, some experts believe that bitcoin could experience a significant correction.
Yuya Hasegawa, a bitcoin and crypto market analyst at Tokyo-based Bitbank, notes that the Fed’s actions may impact both the price of bitcoin and government debt payments. He warns that a potential shift in monetary policy could put pressure on bitcoin prices, while also fueling concerns about the sustainability of the government’s debt.
The current state of global finances is marked by significant government spending and soaring debt levels, with US debt reaching $34 trillion at the beginning of 2024. This has led to inflation rates exceeding 10%, forcing the Fed to hike interest rates and raising fears of a “death spiral.”
Source: https://www.forbes.com/sites/digital-assets/2024/12/24/serious-41-trillion-2025-fed-warning-sparks-20000-bitcoin-price-crash-fear