The Fed’s efforts to reduce inflation by raising interest rates are often associated with a pullback in investment activity across the markets.
Since the announcement of the 75 basis point increase in the United States’ interest rate, the cryptocurrency market has been trading at a high level. Experts explain that markets might have initially been bracing for worse.
The price of Bitcoin ( BTC ) jumped around 8% to about the $22,500 mark after the Federal Open Markets Committee’s (FOMC) decision that interest rates should be raised again. Other top crypto assets saw notable gains in their prices, including Polkadot DOT and Polygon MATIC. These were all following the Federal Open Markets Committee (FOMC) decision to raise interest rates once again.
Quantum Economics CEO Mati Greenspan joked on Wednesday that was asking if this was a “bullish rates hike”.
Greenspan spoke with Cointelegraph and noted that investors had been expecting worse. He suggested that this latest bounce was not unusual.
“Markets love to go up on Fed days, even if it is difficult for them to make a decision. Powell is a master at bad news delivery. Evidently, investors expected worse.”
The Fed’s efforts to reduce inflation by raising interest rates are often associated with a pullback in investment activity across the markets.
There are mixed opinions about whether or not the latest pump will generate enough momentum to support upward , or if there will be a significant retracement before the market fully recovers.
Cointelegraph was told by Pav Hundal, an analyst from Swyftx in Australia, that the company was “surprised” at the exuberance displayed by the response to yesterday’s rate increase. The underlying macro landscape is still up in the air.
While the Fed may be saying one thing, markets hear something else each time we see rate increases. In June, the Fed suggested that large rate increases would not be common. This time, Jay Powell is suggesting that the pace might slow.
He said that the best indicator of future trends is the underlying economic data. “For now, it looks like some inflationary pressures have easing with gas prices falling along with futures prices for staples such as corn and wheat as well as some shipping cost.”
Hundal also noted that Swyftx experienced a 100% increase of early trading around the news, which indicates that “there are clearly a lot people who see value” in current market prices.
Analysts stress that there will be no broader bullish/bearish trend until the U.S. releases data on its gross domestic product (GDP), which could indicate whether the country is in recession.
The good news is that we won’t have to wait too much to see what happens in the crypto market after any initial volatility has subsided. The U.S. will soon release its GDP data, which is going to be a major stress test. Any negative sentiment could wipe out any gains made in the past.
He said, “But if we see signs of resilience in the macro landscape, we could see crypto market cap stabilizing at the $1 trillion mark and rallying from there.”
