Recession Fears Prime Bitcoin and Crypto for ‘Sharp’ Fed U-turn as Ethereum, BNB, XRP, Solana, Cardano and Dogecoin Prices Roar Back
Bitcoin
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The price of bitcoin, after an almighty crash through the first half of 2022, has risen from just over $20,000 per bitcoin to nearly $25,000 while ethereum has soared higher as excitement builds over the looming upgrade and co-founder Vitalik Buterin reveals his “surge “-expectations.
Now, after the US has recorded two consecutive periods of economic contraction – the technical indicator of a recession – analysts predict the Fed may “sharply” slow the pace of rate hikes and “move to policy easing quite quickly”.
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Federal Reserve Chairman Jerome Powell sparked a crypto and stock market selloff last year when he … [+]
“Current economic data indicates that government monetary policy tightening has already moved into a cooling phase and has returned to its long-term GDP growth trend,” Alex Kuptsikevich, senior market analyst at FxPro, said in an emailed comment.
“With such inputs, the chances are increasing that the Fed will soon sharply slow down the pace of rate hikes and may move to policy easing quite quickly,” Kuptsikevich said, adding, “it is worth remembering that in 2018 the Fed raised its interest rate to 2 .5%, causing markets to collapse and forcing the regulator to move into policy easing soon after.”
This year’s bitcoin and crypto market crash – which has wiped $2 trillion from the combined crypto market since the end of 2021 – was triggered by early indications that the Fed would begin raising interest rates from historic lows and tapering Covid-era stimulus measures to reduce soaring inflation .
This week, bitcoin prices surged higher following the Fed’s second rate hike of 75 basis points and dovish signals from Fed Chair Jerome Powell. But Treasury Secretary Janet Yellen downplayed data showing two consecutive quarters of US economic contraction. Yellen told reporters that the definition of a recession is a “broad-based weakening of the economy” and “that’s not what we’re seeing right now,” in part because of the strength of the labor market.
“Eyes will now turn to any economic data that could conflict with the Fed’s goals,” Ben Small, an analyst at British broker GlobalBlock. “Not only must the Federal Open Market Committee be willing to seriously damage growth prospects in the states, but also come to terms with the realities of a looming recession and a labor market under severe pressure.”
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Bitcoin price has jumped in the last 24 hours, helping the price of ethereum, BNB, XRP, … [+]
Bitcoin price, which has risen by 20% in the past month, has been encouraged by those in the crypto industry who are feeling more confident again after the massive crypto crash.
“In times of market volatility, bitcoin is gradually and increasingly recognized by the market as a safe store of value and source of stability,” Alex Adelman, CEO of bitcoin rewards app Lolli, said via email, pointing to bitcoin’s stability in the face of the Fed’s latest rate hike, “intense inflationary pressures” and a second straight decline in GDP.
“This period of pressure in the markets will continue to set bitcoin apart as unique among cryptocurrencies as a deflationary currency, given its fixed supply and decentralized nature.”
