Two huge earthquakes from the Fed may be about to cause price chaos for Bitcoin and Ethereum
Bitcoin and ethereum have come under severe pressure this year as the Federal Reserve raises interest rates to levels not seen in over a decade (although Elon Musk has given a small cryptocurrency a 300% price increase).
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The bitcoin price, after rising to nearly $70,000 per bitcoin last year, has crashed to around $17,000, while the ethereum price has seen a similar selloff – prompting a legendary investor to make a shock price prediction.
Now “desperate” traders and investors are nervously waiting for Fed Chair Jerome Powell to deliver a speech where he may signal a slowdown in interest rate hikes followed by Friday’s US jobs report which is likely to influence next month’s upcoming Fed meeting.
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Federal Reserve Chairman Jerome Powell has embarked on a brutal series of rate hikes … [+]
“Investors will pay close attention to cues from Fed Chair Jerome Powell during his speech later in Washington, DC,” Susannah Streeter, senior investment and market analyst at brokerage Hargreaves Lansdown, wrote in an emailed statement. Powell is speaking Wednesday afternoon at the Brookings Institution amid rising recession expectations and signs that this year’s current inflation is cooling.
After four consecutive rate hikes of 0.75 percentage points this year, the futures market has priced in a roughly 70% chance that the Fed will deliver a 0.5 percentage point increase at the December meeting. Friday’s jobs report is expected to show an addition of 200,000, down from 261,000 last month, which would be the lowest number in 2022 and would give the Fed further reason to soften its hawkish approach.
“They are desperate for indications of the path of rate hikes and how high they need to go to bring down the price spiral,” Streeter said. “Although super-sized rate hikes appear to be in the rearview mirror, a 0.5% increase is still expected in December, with the tightening cycle considered to be far from complete.”
The Federal Reserve has this year embarked on a brutal series of interest rate hikes designed to suck liquidity out of the system after it was flooded with cash during the Covid crisis.
The tightening of monetary policy has driven down stock markets that had soared higher for the past two years and wiped out about $2 trillion from the previously red-hot combined bitcoin, ethereum and crypto market.
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The Bitcoin price has fallen over the past month due to the fallout from the collapse of major cryptos … [+]
However, investors are increasingly predicting that the markets are bottoming out, with some forecasting a 2023 bitcoin price rally that is “steadier” than 2021’s “high-octane rush.”
“Confidence is creeping back into the markets,” Nigel Green, chief executive of deVere Group, said by email. “We expect that as the program winds down, which will likely be in the second quarter of 2023, these will be the assets that will experience some of the biggest rallies.”
However, “the high-octane rush of previous rallies is unlikely, instead we will see a smoother, continued upward trajectory for bitcoin as the relaxation begins,” Green added.
