Bitcoin dropped below $20,000 Wednesday due to a variety of factors, from macroeconomic concerns to issues with cryptocurrency businesses.

At 07:36 AM, the world’s biggest cryptocurrency was down more than 4 percent to $20,056.48 According to CoinDesk data, ET. Bitcoin fell to $19,841 earlier on Wednesday.

Other digital coins, including ether, were also significantly lower.

Bitcoin trades within a narrow range over the past two weeks, unable to make any major moves above $22,000

Analysts at Bitfinex stated that bitcoin is currently being guided lower by a narrative that could continue for the remainder of the year. It was one of rising inflation and looming recession.

While inflation continues to rise, central banks continue to aim for more rate hikes creating fears of a recession elsewhere in the U.S.

U.S. stock market fell on Tuesday and futures were under pressure on Wednesday. Bitcoin is closely linked to U.S. stock market movements and tends to follow them lower or greater.

CNBC’s Vijay Ayyar, vice-president of corporate development at Luno and international, said that bitcoin will likely trade between $17,000 to $22,000 for a while due to current market sentiment and an expected interest rate increase from the U.S. Federal Reserve. This is despite the fact that all risk assets are being weighed down.

Ayyar stated that most bounces have been sold off over the past few weeks. These are typically called bear market bounces and are intended to trap buyers who will then sell their positions lower.

Sam Bankman-Fried is the CEO of cryptocurrency exchange FTX and has stepped up to save struggling companies such as BlockFi or Voyager Digital, by offering credit lines.

“The market is taking a break after the fall. The market is still experiencing systemic problems as people continue to prop up different dominoes that can trigger knock-on effects. Charles Hayter, CEO at website CryptoCompare, spoke to CNBC via email.

On Wednesday, the U.S. Federal Reserve will raise its federal funds rate. JPMorgan economist Michael Feroli believes rising inflation will force the Fed to raise the rate by 75 basis point (bps) during its next meeting. CME Group data last week indicated that 95% of the market expected a 50-bps rate increase in the United States this month. Some expect a Fed that is hawkish, but others believe the U.S. central banking may be more dovish if markets worsen.

Global Markets Shake With Focus on the Fed’s Next Rate Increase — JPMorgan Economist Expects 75 bps

Major U.S. stock and cryptocurrency market indexes fell significantly Monday as Monday was considered to be one of the most bloody starts to the week for a while. CNBC’s Scott Schnipper stated Monday that the S&P 500 was now in an “official bear market,” according to S&P Dow Jones Indices.

Precious metals such as silver and gold also saw their value drop. The price of gold per ounce fell 2.67%, while silver’s dropped 3.58%. The crypto economy as a whole lost 18% on Monday, and BTC fell below $21K. All eyes now turn to the Federal Open Market Committee meeting (FOMC), where members of Federal Reserve System will likely raise the federal funds rates.

Moderate increases could be anywhere from 25 to 50 basis points. Some predict 75 basis points and the Fed could go up to 75 to 100bps at its next meeting. CME Group data last week showed that there was a 95% probability that the Fed would raise its benchmark rate by 50 basis points. Michael Feroli, a JPMorgan economist believes that a 75-bps increase is possible and that 100 bps are also possible.

In a Monday note Feroli explained to clients that the Fed may increase its rate by 75 basis points Wednesday if there is a “startling rise” in long-term inflation expectations. Feroli said that one might wonder if the surprise would be to see 100bp rise, which we consider a non-trivial threat.

Economists at Goldman Sachs Predict a 75bps Hike — JPMorgan Strategist Marko Kolanovic Believes that a Dovish Surprise could Happen

Feroli is agreed by Goldman Sachs economists who believe that a 75-bps increase will be announced at the FOMC meeting. Goldman economists said Monday that the Fed’s forecast was being revised to include 75-bps hikes in June, July.

Note from Goldman Sachs analysts to investors:

In 2023, we anticipate two rate increases to 3.75-4%. Then in 2024, one reduction to 3.5-3.75%. For a 3.25-3.5% terminal rate, we expect a 50bp rise in September. We also anticipate 25bp increases for November and December. End-2022, the median dot will be 3.25-3.5%

JPMorgan’s Markokolanovic, JPMorgan’s strategist, told the press that the U.S. would likely avoid a recession despite Feroli’s 75 bps prediction. JPMorgan Chase & Co.’s strategist explained that Fed could be dovish due to the craziness of bond markets and stock market.

Kolanovic’s Monday note to clients stated that Friday’s strong CPI print, which led to a rise in yields, and the sell-off of crypto over the weekend are weighing investor sentiment and driving market lower. The JPMorgan strategist said that rates market repricing was too extreme and that the Fed would surprise dovishly in relation to what is currently priced into the curve.

In 2022, Bitcoin and other cryptocurrencies were at the heart of financial markets. Many have noticed extreme volatile trends and aggressive Web 3 development. Block Inc. published a report that details a survey of 9,500 people on major continents to further examine these trends.

Block Inc. collaborated with Wakefield Research in publishing the report entitled’Bitcoin Knowledge and Perception. The report discusses the retail trends in Bitcoin perception in 14 countries around the globe. The report also shows that most people view Bitcoin as a payment method, and other uses.

Why is Bitcoin being bought and not purchased?

All income levels have the same reason to buy Bitcoin: it’s simply to make more money. The study also revealed other trends in Bitcoin utility. Because they are looking for protection against inflation and diversification, people with higher incomes than average are more likely to buy Bitcoin with excess cash.

Lower income groups, on the other hand buy Bitcoin to send money or purchase goods and services. They recognize Bitcoin’s utility more than the high-income group.

Despite all the benefits, many people are still hesitant to own Bitcoin. People don’t purchase Bitcoin because they lack Bitcoin knowledge.

It is followed closely by cybersecurity, price volatility and regulatory uncertainties.

The gender gap must be dissolved

According to the report, there is no gender gap between those who own Bitcoin and consider themselves experts. When compared to men, women tend to purchase Bitcoin for its utility functions.

The report continued to say,

47% of women view the possibility of purchasing goods and services as a reason to purchase bitcoins, compared to 34% of men. Similar to men, 47% see bitcoin’s potential to send money to other people as a reason to buy it. This is compared to 27% for women.

Is it possible?

One interesting observation was made in relation to Bitcoin’s future. People are more optimistic about the future of cryptocurrency the more they know about it.

Also, millennials are more optimistic about Bitcoin’s future than baby-boomers. As expected, this finding was in line with previous research.

What’s the deal with cryptocurrency right now?

It is worth noting, however, that the opinions on Bitcoin and cryptos remain divided in mainstream circles. For example, a recent Reuters report highlighted ‘concerns’ associated with cryptocurrencies.

The same applies to cryptos. Its potential impact on financial stability as well as its need for protection of vulnerable customers are the two main points.

Needless to state, although retail investors may be optimistic about the asset type, regulators are not. Not yet, at least.

There is a cost to the promise of unlimited access, freedom from government authorities and little or no regulation and the ability conduct transactions anywhere and anytime. One of the most controversial topics around digital assets is crypto mining. Despite Bitcoin being the most popular cryptocurrency on the market, its mining process is one of the most controversial. Nearly every BTC investor knows about the negative sides to investing in Bitcoin. One of these is its mining process.

The public ledger of Bitcoin is not centrally controlled. Instead, miners constantly improve Bitcoin’s network. Bitcoin’s price has seen many highs and lows over the last few years. This has drawn a lot attention from the media worldwide about the negative effects of Bitcoin mining. Experts predict that Bitcoin mining could also negatively impact the cryptocurrency market by 2022, as more investors choose sustainable investment options.

While mining several cryptocurrencies has progressed from the initial stage of dangerous cryptocurrency mining, many major cryptocurrencies still use harmful algorithms that consume large amounts of energy and leave large carbon footprints. The government has urged the crypto industry to find alternative ways to create more cryptocurrency, including improvements in mining methods. Additional requirements include the registration of mining datacentres.

Experts believe that Bitcoin’s decline and other crypto markets are partly due to the negative effects of crypto mining and Bitcoin. This trend is expected to continue into 2022, as more Bitcoin miners from North America, Russia and Europe deploy more machines to mine Bitcoin. This suggests that investors will start to look for more sustainable investment options, which could adversely impact crypto investments in 2022.

Due to rising inflation costs and war, the real estate market in Spain and Europe has grown since last year. This has changed some of the economic recovery predictions. According to numbers by Europa Press, interest in the real-estate market has increased 400% since November. Many investors are now looking to buy properties without ever seeing them.

Investors have taken money from riskier investments such as stocks and cryptocurrencies to seek refuge in the property market. Rebeca Perez is the founder and CEO at Inviertis. This company allows users to rent properties in Spain. She said:

[Investors] are putting their money on the stock exchange and investing in real property to protect their assets. This situation has only worsened after the Russian invasion of Ukraine.

Revaluation of Crypto Investments

Perez believes that stock and crypto investors should value real estate properties because they offer stability and less volatility than stock and crypto markets. They also have the ability to get in and out of the market quickly due to high demand.

Some crypto investors have also been able to buy properties with cryptocurrencies and not need to exchange them for fiat currency using banks. Perez said that this can be very attractive for some investors. She explained:

It is possible to turn a risky investment in to a prudent one. If you are lucky enough, you could buy a house for 200 euro back then, if you entered the crypto world in 2012.

There are still some hurdles to overcome when using cryptocurrencies for this type of transaction. They include setting the price in bitcoin, or any other cryptocurrency, and calculating the taxes that will be due.

These types of operations are more common in Latam , many properties were already sold for crypto and there is more acceptance of these assets as payment methods.