Investors are anticipating more fluctuations in bitcoin and other cryptocurrencies, amid concerns that an overly hawkish Federal Reserve threaten to squelch investors’ appetite to take risks across the markets.

The typical volatility that is characteristic of cryptocurrency has been on full display over the past few weeks. Bitcoin is the biggest cryptocurrency, is climbing by around 33% since Jan. 24, and lastly traded at $43,850. It’s regaining its value after a tumble that cut its price by half from its November record price. 8-ways-make-money-freelance-web-developer , ether , is up 45percent from Jan. 24 with a price of around $3200 in the wake of a near 56 percentage plunge from its previous record high of $4,868, which was also recorded in November.

The proponents of cryptocurrency previously asserted that they are not tied to other assets however, bitcoin as well as its rivals had huge gains over the past two years, rising in tandem with stocks as Fed and other central banks released extraordinary levels of stimulus into the world economy. Bitcoin has increased by 1,039 percent since March of 2020 and Ethereum has seen a rise of 2,940%, but the rising prices of both cryptocurrencies have been cut short by a variety of stomach churning selling.

Their recent volatility is a result of a larger downturn in the market, triggered by people revising their portfolios so that they account for an aggressive Fed that is expecting to raise rates as many as seven times this year as it battles rising inflation. The most widely used S&P 500 index (.SPX) has dropped 5.5 percent in the year to date, while the technologically-oriented Nasdaq (.IXIC) was down by 9.3%. lost 9.3%.

Beliefs that a more aggressive central bank tightening cycle going forward will hamstring risky assets has made difficult for some traders to maintain their optimistic outlook on bitcoin and the other cryptos as an asset class associated with extreme volatility.

A rise in tensions within Ukraine in Ukraine, where Washington warned that a Russian invasion could take place at any time, may generate market-wide volatility Investors have said. Read more

Bitcoin will “really become the most powerful mover and plenty of risks that could cause a 40% loss out of nowhere,” said Ed Moya the senior analyst at Oanda.

Its volatility in Bitcoin hasn’t stopped analysts from looking to determine what the price of Bitcoin is or point out potentially important price levels.

Analysts at JPMorgan estimate bitcoin’s current actual value to be about 38,000 dollars, about 15% less than its current price – based on its relative volatility to that of gold, a different asset which investors typically use to protect their portfolios from rising inflation and economic uncertainty.

Vanda Research, meanwhile, has stated in a note that the majority of negative bets on the weaker bitcoin price were made at approximately $47,000 “there may be a substantial short squeeze if that threshold is exceeded, and retail investors return into crypto-trading.”

However, the correlations between Bitcoin and the S&P500 hit the all-time highest on Jan 31st, according to research of BofA Global Research, undercutting the claims of those who plan to utilize the cryptocurrency as an asset to shield against market volatility.

Investors can look forward to minutes of the Fed’s latest annual meeting of its monetary policy committee, due out Wednesday. Walmart (WMT.N) as well as chipmaker Nvidia Corp (NVDA.O) will be among the companies that will release resultsas the corporate earnings season kicks off.

A few investors are preparing themselves to take advantage of the volatility in bitcoin, believing that the long-term benefits that blockchain technologies offer, its built in supply limit, and the network effect its technology produces, will last even in the face of frequent price fluctuations.

Jurrien Timmer director of macro-economics at Fidelity has compared the current speculation in cryptocurrencies to the high volatility tech stocks experienced during the dotcom era nearly 20 years ago, a boom and bust cycle that left relatively few companies remaining.

“Amazon is still going strong and Apple remains in business and they’re more powerful than ever, and the expectation is that for bitcoin, it will be the same,” explained the man. “But bitcoin isn’t immune from the waves of speculation and sentiment.”

Bitcoin could hit $100,000 by 2023. Timmer believes, in accordance with his supply/demand models.

Others think that mature cryptocurrency such as Bitcoin and Ether are unlikely to be able to offer the same stunning gains they have achieved since their founding.

Instead, they’re looking to the universe of new, alternative coins that are being developed to make use of the money flooding into the crypto world, including the metaverse and NFTs. NFTs accounted for more than $30,000 worth of venture capital investments last year, as reported by PitchBook.

Some altcoins include cosmos Terra Luna, and Polkadot that are all down by 20.5% three times, and 25.5 percentages year-todate, respectively from coinmarketcap.com.

Understanding the risks linked to their decentralized nature and financial systems is going to be one the biggest challenges facing investors in 2022, said Lily Francus, director of quantitative research strategy at Moody’s Analytics.

Cryptocurrencies “are likely to remain extremely volatile in the coming years, but there are significant players on the institutional side and the retail side that are still expanding, and so the interest is still growing,” said Oanda’s Moya.