Crypto turnaround: Market remains largely resilient despite Fed’s 75 bps hike
The cryptocurrency market was resilient despite a 75 basis point (bps) interest rate hike by the Federal Reserve announced on Wednesday, market data showed. Total market cap (m-cap) remained above $1 trillion, and the two largest cryptos, after m-cap, Bitcoin (BTC) and Ethereum (ETH), remained above the $20,000 and $1,500 mark, respectively.
Starting at. As of 13:00 (IST) on Friday, BTC was trading at $20,591, up 2 percent over the past seven days, according to data from coinmarketcap. ETH was at $1,579, showing a 5 percent jump over the same period. The total m-cap of the crypto industry was $1.02 trillion.
“The Federal Reserve’s 75 bps rate hike was initially met with cheers in the market as it was on expected lines, but that outlook changed course sharply as Chairman Powell’s press conference began. He cited the need to recalibrate for a higher terminal rate that sent “Risk In in a downward spiral, with the S&P 500 falling 2.5 percent. Surprisingly, crypto markets remained resilient and have actually ended the week in the green,” Parth Chaturvedi, Head of Crypto Ecosystem at trading platform CoinSwitch, told Business Standard.
During the week, the Reserve Bank of India (RBI) also rolled out its pilot for India’s central bank digital currency.
“If bulls can hold BTC above the current level, we could see upward momentum. But if bulls lose this initiative, we could see a bearish trend by the weekend,” said Edul Patel, CEO and co-founder of crypto investment platform Mudrex. .
Ethereum fell below the $1,550 mark after the announcement, but quickly recovered.
“If it closes above that level today, the next resistance will be at the $1,600 level. If not, ETH could fall to the $1,500 level and then to the $1,450 area in the coming days,” Patel added.
Another crypto, Dogecoin, often called Elon Musk’s favorite, surged until Tuesday on news of Musk’s acquisition of Twitter and his plans to integrate the token with the social media platform. But since Tuesday, prices have started to cool down.
On Tuesday, it hit the price of $0.15, taking its market capitalization to $20.7 billion. On Friday, it traded at $0.12, down 6.5 percent in one day alone. However, during the week it overtook Cardano to become the eighth largest cryptocurrency in the world by m-cap.
“DOGE’s market capitalization has crossed $17.5 billion and has displaced Cardano’s ADA in the rankings,” Chaturvedi said.
But as the world economy struggles to recover, experts also warned investors.
“The current BTC price rise is likely to be only temporary, given the gloomy state of the world economy. In addition, in the last five years, the fourth quarter of BTC has fallen three times. BTC fell by 45.55 percent during the 2018 Bear Market,” Anurag Agrawal of asset management firm Kunji said in a research report.
“Additionally, the Fed’s monetary policy and the state of the world economy will affect the movement of Bitcoin this quarter,” he added.
