Reshab AgarwalFeds increase interest rates by 75 basis points yet again. They plan to continue this till inflation is brought under control. However, even though this is not positive news for the market, the crypto markets have rallied after the news broke out. This is completely opposite of what happens when interest rate hikes happen and investment activities slow down in the markets.
Why are crypto markets rallying?
Interest rate hikes by the feds do not come as a surprise, and the markets have already adjusted to the same. However, many analysts are saying that investors were expecting a larger hike. So, when it was another 75 basis point increase, the crypto markets rallied quite a bit. Bitcoin breached the $23,000 price point, and Ethereum jumped above $1,600 yet again. Other popular cryptocurrencies like Uniswap, DOT, and MATIC have also risen significantly in the last 24 hours.
24hr change
Now, whether this is a good thing or not is difficult to ascertain in one day. We have to wait for a week or two to see how the markets behave, or it was just some hype. But even if it’s not, I do not expect much from this rally as there will be multiple interest rates hike even from here on. And overall, the recession and poor macroeconomic conditions are not super bullish environments for crypto to rally.
Many are also pointing out that the $19k-$23k price point needs to be watched out for. There is hardly any accumulation, and the price is stuck at these levels. So, there is quite a good chance that the markets could fall lower, and when it does, it’s time to buy. We can get an idea of what will happen in a day or two. Whether the rally is sustained or there is a pullback.
Markets will be volatile in the near future
Not just crypto but also the stock markets are expected to be volatile, seeing the current macroeconomic conditions. The US is soon going to release its GDP numbers which will give us a clear idea of what the future move of the marts will be. It will also show if we have already entered a recessionary period or are on the way. If it’s positive, the rally could sustain very well and vice versa.
What are your thoughts as the Feds increase interest rates by 75 basis points but crypto markets rally? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.
Also Read: SEC lacks the IQ to investigate Coinbase’s crypto listings, says Michael Burry.