Bitcoin, Ethereum and stocks jump after Fed’s fourth rate hike
by James · November 2, 2022
The Federal Reserve announced today that it will do so continue with its aggressive monetary policy to fight inflation, and both crypto and traditional markets are reacting positively to the news so far.
Bitcoin, the largest cryptocurrency by market capitalization, was trading at $20,650 at the time of writing, according to CoinGecko data, a modest 24-hour increase.
While Ethereum, the second largest cryptocurrency by market capitalization, was up 1.3%, priced at around $1,600.
On news of the Fed’s announcement, stocks also rose. Wall Street trading was volatile yesterday news that the labor market was strong and the Fed would therefore continue to raise interest rates.
The Federal Reserve today raised interest rates by 75 basis points for the fourth time in a row this year to combat inflation – currently at a 40-year high in the US
Although the Fed’s aggressive monetary policy has sent investors into safe havens such as the US dollar – which has seen its value rise – the central bank is expected to slow the pace of tightening soon, positive news that may have prevented a sell-off today.
“When determining the pace of future increases in the target range, the committee will take into account the cumulative tightening of monetary policy, lags with which monetary policy affects economic activity and inflation, and economic and financial development.“tTodaystatement from the Fed said.
Bank of America said in a Wednesday report that it expects “Steilen to open the door to a slower pace of increases from December.”
Along with inflation, Russia’s invasion of Ukraine and Europe’s energy crisis have also led to investors around the world selling their holdings. An aggressive Fed policy could hurt the cryptosphere, experts said Decrypt.
OANDA senior market analyst for the Americas, Edward Moya told Decrypt: “Digital assets are going to struggle here if the Fed remains hawkish on fighting inflation.”
“The economy is not weakening fast enough to justify a downgrade with austerity, and that could weigh on crypto,” he added. “Bitcoin’s correlation with US stocks remains intact and is likely to continue until inflation declines significantly,” Moya said.
Bitcoin and Ethereum are still up 2.1% and 8.4% respectively in the last seven days. And Dogecoin, the original “meme coin” pumped by Elon Musk, is an outlier in the digital space: the coin has risen 106% in the past week since the world’s richest man bought Twitter.
