Top Cryptocurrencies Hold Steady as Fed Raises Interest Rate
Popular crypto Bitcoin and other major coins have reacted positively to the Fed’s announcement on Wednesday. The central bank increased interest rates by 25 basis points, a move that perfectly aligned with what the market expected.
Nonetheless, the recent Fed interest rate hikes have been the highest in decades. Last year, the Fed started hiking rates in an effort to slow down the high inflation. As a result, the values of stocks, crypto, and equities were negatively impacted.
As of this writing, the largest crypto by market cap, Bitcoin, is up 4% in the past 24 hours and is changing hands for $24,057. However, it is still down about 66.1% from its peak price of $69,023, according to CoinGecko.
On the other hand, the second largest cryptocurrency by market cap, Ethereum, saw an increase of 6% in the past day and is currently trading at $1,657. That said, ETH is down about 65.7% from its all-time high price of $4,867. Additionally, the 7-day gains of both Bitcoin and Ethereum are 2.6% and 1.4%, respectively.
Financial Analyst Says New Rate Hike Won’t Move the Crypto and Stock Markets
James Butterfill, Head of Research at Coinshares, claims that Wednesday’s Fed’s announcement added nothing significant to really move the stock and crypto markets. Fed Chairman Jerome Powell attempted to express aggressiveness by saying the job wasn’t done, but the markets never bought it.
Before the Fed’s announcement, the US stock market saw a drop and then jumped right after the new rate hike was revealed. At the time of publishing, Nasdaq has seen an increase of 0.28%, while S&P500 rose by 0.26% in the past 24 hours.
Investors Sell Cryptocurrencies, Shift to Greenbacks
Cryptocurrencies are classified as ‘risk-on’ assets, meaning their prices can be very volatile. As a result, many investors have resorted to trading such assets for greenbacks like gold and USD as the Fed continues to hike interest rates to get inflation under control.
On Wednesday, the Fed’s statement suggested that the central bank won’t stop raising interest rates this year. However, it won’t be as aggressive as in 2022, when it increased the rates by 75 basis points about four times. The Fed says it aims at getting back the inflation to 2% over time.
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