The crypto market has seen sustained bloodshed in the past week, as Bitcoin and other cryptocurrencies drop into 2021 lows. The sector seems correlated with the U.S. Stock Market which has also been trending to the downside as investors prepared for a potential hike in interest rates.
Related Reading | Russia’s Central Bank to Ban on Crypto Mining and Trading
Former Goldman Sachs CEO and Chairman Lloyd Blankfein recently talked about the economic outlook for 2022, the growing tensions between the U.S. and Russia over Ukraine, and its potential effect on the market, inflation, and crypto. On the latter, like other big bank executives, he seems more optimistic.
A former skeptical on crypto and its potential, Blankfein said for CNBC’s Squawk Box that his view on digital assets has “evolved”. In that sense, he referred to the early days of the internet when some products were starting to integrate with this nascent technology and experienced their own wave of skepticism:
I remember when, a couple of decades ago, maybe thirty years ago, they were auctioning off bandwidth for cellphones and I thinking to myself, “Why would anybody want to carry around a phone? (…)”. But guess what? That worked. I can’t predict the future, but I can predict the present, like what is happening, and I look at crypto and it is happening (…).
The former Goldman Sachs executive claimed he is unable to shift his “intellectual position” on digital assets, but from a more “pragmatic” stance, he is able to acknowledge this industry’s capacity to create value. Blankfein added:
Now it has lost a lot of value, but it is (crypto) at the point where there are trillions of dollars of value contributing into it and there are whole ecosystems are growing around it. And of course, we have the benefits of instantaneous transfers, reduction of credit risk, and all the benefits of blockchains.
Will Bears Continue To Assault The Crypto Industry?
Blankfein emphasized that he remains skeptical about the crypto industry, but the aforementioned items make him “want to have” a bet on it. In the short term, the industry could maintain its correlation with the traditional market.
In that sense, Bitcoin’s price performance will be key in determining the immediate future of cryptocurrencies. As of now, BTC has jumped back from the lows at $33,000 and could see some relief during the following week.
The U.S. FED is set to hold its Federal Open Market Committee (FOMC) meeting on Wednesday. This date will be key for investors to measure the institution’s intentions about interest rates. A hawkish FED could trigger a fresh selloff across global markets.
Related Reading | Data Shows Strong Correlation Between Bitfinex Reserve & Bitcoin Price During Crash To $35k
As of press time, the crypto total market cap stands at $1.62 trillion with a 2.26% loss in the 4-hour chart, as seen below.