Robert Steinadler, 2 months ago

Fed is raising rates by 25 bps – What to expect for crypto?

Today was the big day and the Fed once again set the direction for the markets. What is the result of today’s FOMC meeting and how did it affect crypto?

The results are in

According to the CME Fed Watch Tool, it was expected that the Fed would raise the rates by 25 bps for the vast majority of market participants. The last FOMC meeting already hinted that the Fed would go easier on the market while at the same time staying committed to combating inflation. The result fully met the expectations of analysts and the market reacted slowly to the news.

Traders as well as the broader media will have to wait just a little bit longer until Jerome Powell speaks once again during the press conference. It is expected that the tiniest hint from Powell on how the Fed is going to proceed could cause volatility. That being said, cautious investors might want to avoid the market under these conditions since a misinterpretation of Powell’s speech could lead to an unpleasant result in trading.

At the time of writing no unusual price swings were spotted and it appears that the market is reacting neutrally to the breaking news. However, this could change once the press conference is going to start.

Why is this important for crypto?

It might seem a little bit odd that the Feds policy is influencing the value of cryptocurrencies, which are anti-establishment investments. Since the crypto market matured within the last few years this is nevertheless totally normal and nothing to worry about.

Generally speaking, crypto is viewed as a risk asset and this also explains why there is a strong correlation between tech stocks and crypto. Both are categories that promise a high return to investors but carry higher risks than other assets.

The Fed made a decision and it is neither good nor bad, it simply influences the expectations of market participants. That being said, inflation and the monetary policy are closely tied together. Crypto investors should watch out for the next Q4 reports of big companies like Apple, Alphabet, and Amazon starting tomorrow. It is expected that their results will give a hint on whether an economic crisis will deepen or if it can be avoided. Of course, the release of US CPI data for January will also be a highly anticipated event.  

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FED increased rates by 25 bps  - Crypto reacts neutral

Mar 22, 2023

Today it was about that time again. The FOMC meeting came to an end and once again the press conference with Jerome Powell was highly anticipated. Why was this recent decision perceived as important by many analysts and how did Bitcoin and the market react?

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