Crypto Market Review, July 27

Today is the day both cryptocurrency and financial markets have been waiting for, when the Fed will finally decide whether to raise the key interest rate in the country by 50, 75 or even 100 bps to strengthen the national currency and tame uncontrollably high inflation.

How does crypto feel before a new hike?

The cryptocurrency market correction we saw between July 19th and July 27th may not just be a “technical correction” but the actual pricing of an upcoming interest rate hike that usually significantly affects risky assets like cryptocurrencies.

With most assets losing around 5%-10% of their value in the last few days, we can tell that the market is already bracing itself for the effects of the upcoming hike and even pricing out some unexpected actions from the regulator.

By selling or buying assets in advance, investors are trying to protect themselves against unexpected volatility that could arise due to some surprising thing that a Fed representative might do or say.

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What can you expect after the hike?

While the market believes the Fed will stick to a 75 bps rate hike, some analysts believe that won’t be enough to tame inflation and the regulator should go for a 100 bps hike. Such a large interest rate increase will most likely lead to another few weeks or months of a bear market.

US financial regulators have already indicated that they are going to push the tightening of monetary policy until the end of this year, which means that the digital asset industry remains under severe pressure, especially if we consider the fact that Bitcoin and other assets largely follow the NASDAQ -stock.

Large funds are getting rid of crypto holdings

The Ark Investment Fund, led by Cathie Woods, recently sold all of its Coinbase stock holdings, signaling to investors the coming long-term volatility in the cryptocurrency market due to tight monetary policy.

In his latest posts, Woods expressed his concerns about the Fed’s monetary policy, stating that the Fed’s excessive hawkishness is unnecessary and could lead to things we saw back in 2008.

Unfortunately, the regulator is aiming for a certain inflation target and will not back down until it is reached, so both the cryptocurrency and stock markets are going to bleed until the Fed reaches its targets.

At press time, the majority of digital assets are in a neutral state, and the biggest representatives of the industry such as Ethereum, XRP and Bitcoin are in the “gray zone” as they show neutral performance with negligible price fluctuations.