The cryptocurrency space is currently experiencing another bear market as prices are down by more than 50% from the all-time high.
The cryptocurrency market has recorded massive losses over the past few months. The total crypto market cap is down by more than 60% since hitting an all-time high of $3 trillion in November 2021.
At the moment, the total crypto market cap stands around $900 billion. However, Sam Bankman-Fried, the CEO of FTX crypto exchange, believes that the rising interest rate is the reason why investments in cryptocurrencies have reduced.
SBF made this known during a recent interview with NPR, stating that people with money are scared to invest in cryptocurrencies.
The FTX CEO said the rising interest rates are scaring people away. He blamed the United States Federal Reserve for the ongoing situation within the cryptocurrency market. He said;
“The core driver of [the crypto downturn] has been the Fed. People with money are scared.”
Last week, the Federal Reserve raised interest rates by three-quarters of a percentage point. This was the Fed’s largest hike since 1994, to bring the benchmark funds rate to 1.5%-1.75%. This latest development means that rates are now back to where they were before the COVID pandemic hit in March 2020.
The bear market has seen numerous cryptocurrency companies record huge losses. SBF said his companies have been able to help out whenever possible to limit the effects of the market crash. He said;
“I do feel like we have a responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion. Even if we weren’t the ones who caused it, or weren’t involved in it. I think that’s what’s healthy for the ecosystem, and I want to do what can help it grow and thrive.”
The cryptocurrency market performed well over the weekend, with Bitcoin trading above $20k per coin at the moment.