Linkedin stock quotes1/3/2024 ![]() In general, it’s difficult to know whether the market has already priced in another potential rate increase, says Joshua Fernando, crypto expert and CEO of eCarbon, a blockchain tech company focused on carbon emissions allowances. “As global recession calls grow, the focus will switch to how soon the Fed will be cutting rates.” “The majority of crypto watchers are still awaiting further weakness,” Moya says. Investors are keeping a close eye on bitcoin, ethereum, and the crypto market at large to see “possible retest of the June lows,” according to Edward Moya, a senior market analyst at Oanda. Bitcoin and ethereum fell down more than 70% in June since the peak of last year’s bull run. The Fed’s interest rate hike in June was one of many factors that rocked the crypto market in particular, which was already in “ crypto winter” mode with prices slashed across the board. If the stock market dips because of another rate hike, the crypto market likely will too - and vice versa. Both have been moving in unison and have struggled to gain any momentum this year as investors are pulling away in response to rising interest rates, surging inflation, and a potential recession. Risky assets like stock and crypto have been heavily correlated since the start of 2022. ![]() Why Fed Rate Increases Can Influence the Crypto MarketĪggressive rate hikes are not positive for crypto prices, and experts say the choppiness will likely continue in the short term. is either in or could soon be in a recession continues to loom large in the minds of Americans. “The decision provided optimism that the end of tightening is in sight and that triggered a nice rally for risky assets that helped elevate cryptos,” says Edward Moya, a senior market analyst at Oanda.īut an uncertain economic outlook continues to hamper the crypto and stock markets, which have been increasingly aligned with one another in recent months. Neither of the two biggest cryptos has seen significant movement since the July Fed meeting, though a series of mini rallies for each have at least given investors hope that they could be back on the upswing. Bitcoin’s drop below $19,000 last week was the lowest its been since June. While historic data doesn’t clearly indicate how markets will react in the future, especially in the volatile and unpredictable crypto market, it’s a safe bet that investors should expect new volatility next week following the Fed’s next expected rate increase announcement.īitcoin and ethereum prices had been on the rise to start the week, before Tuesday’s release of August inflation data sent them tumbling back down below $22,000 and $1,700, respectively. Bitcoin’s price drop following the July meeting was a bit smaller, at around 5%, and followed by a quicker recovery than previous Fed meetings. Bitcoin’s price dipped as low as $17,500 following the Fed’s two-day meeting on June 14 and 15. The Fed in May approved a half percentage point hike and laid out a plan, starting in June, to reduce the central bank’s $9 trillion balance sheet. Bitcoin’s price spiked immediately after the Fed’s meeting on May 3 and 4, but then began to decline significantly on May 6. The Fed approved a 0.25% rate hike, which was the first increase since 2018. Here’s a closer look: Bitcoin’s price briefly declined during the week of March 13, the same week as the Fed’s second meeting this year, before climbing back up. ![]() While the drop following July’s meeting was less severe, there’s a clear pattern of Fed rate increases corresponding to drops in the crypto market. Historic price charts show how bitcoin’s price dropped by at least 10% or more following the Fed meetings in March, May, and June. If these early results hold and it ends up being anything like the last four Fed meetings, crypto investors could be in for another rollercoaster next week. The ramifications for each new Fed rate increase continue to play out across the crypto and stock markets, as investors react to an uncertain economic environment. The Fed’s moves continue in an effort to cool the economy and slow inflation that’s been driving up prices to their highest levels in decades. Ethereum saw a sudden drop as well, but held above $1,300 for the time being. ![]() The Federal Reserve announced another big rate increase Wednesday afternoon, and the crypto market didn’t take long to respond.īitcoin dropped below $19,000 shortly after the Fed’s announcement that it would raise the federal funds rate to a target 3% – 3.25% – the fifth consecutive time the Fed has raised rates this year. For more information, see How We Make Money. Some links on this page - clearly marked - may take you to a partner website and may result in us earning a referral commission. We want to help you make more informed decisions.
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