The Fed’s attempts to reel inflation in by increasing interest rates
are usually associated with a pullback of investment activity across
markets.
Crypto markets have been pumping since the announcement of a 75 basis
point interest rate hike in the United States, with experts explaining
that the markets may have been initially bracing for much worse.
On July 27, price of Bitcoin (BTC) surged around 8% to the mid $22,500 mark
following the Federal Open Markets Committee (FOMC) decision to raise
interest rates yet again. Many other top crypto assets surged in price
as well, with Ether (ETH), Polkadot (DOT) and Polygon (MATIC) all seeing
notable double-digit gains over the past 24 hours.
Quantum Economics founder and CEO Mati Greenspan on Wednesday jokingly questioned whether this was a “bullish rate hike” on Twitter.
Speaking
with Cointelegraph, Greenspan noted that investors were clearly
expecting worse and suggested this latest bounce is nothing out of the
ordinary.
“Markets love going up on Fed days, even when
their decision is to be tough. Powell is particularly skilled at
delivering bad news. Clearly investors were expecting worse.”
Markets were expecting a larger hike. https://t.co/HkR8Upfi52
— Mati Greenspan (@MatiGreenspan) July 27, 2022
The Fed’s attempts to reel inflation in by increasing interest rates
are usually associated with a pullback of investment activity across
markets.
However, there are mixed opinions amongst the community about whether the latest pump will have enough momentum to sustain upwards, or if there is a significant retracement on the cards before the market starts to fully recover.
Don't you see that price is just ranging between 19k and 23k during a downtrend and with no signs of accumulation?
— il Capo Of Crypto (@CryptoCapo_) July 27, 2022
If you want to buy here, go ahead. Then don't regret it and cry if the market makes new lows, which is likely.
I'm not buying.
Pav Hundal, an analyst at Australian crypto exchange Swyftx told
Cointelegraph that the company was “surprised at the exuberance of the
reaction to yesterday’s rate hike,” as the underlying macro landscape
still seems up in the air.
The Fed is saying one thing
and the markets seem to be hearing something else every time we see rate
rises. In June, it was the Fed suggesting large rate hikes would be
‘uncommon,’ this time around its Jay Powell hinting that the pace of
increase might ‘slow’.”
“The best gauge of what’s to
come is the underlying economic data and for now at least, it does look
like some inflationary pressures are easing, with gas prices falling
alongside futures prices for staples like corn and wheat, as well as
some shipping costs,” he added.
Related: Ethereum price ‘cup and handle’ pattern hints at potential breakout versus Bitcoin
Hundal
went on to note that Swyftx saw a 100% increase in early trading
surrounding the news, indicating that “there’s clearly a lot of people
who see value in the current market prices.”
The analyst
emphasized that a broader bullish or bearish trend will not likely
become apparent until the U.S. releases important data relating to the
performance of its gross domestic product (GDP) in the coming days,
which could signal whether the country is officially in recession or
not:
“The good news is we’re not going to have to wait
too long to see what happens to the crypto market when any initial
volatility washes out. The U.S. is about to release its GDP data and
that’s going to be a big stress test. Any negative sentiment here could
wipe out recent gains.”
“But if the macro landscape
starts to show signs of resilience, we could see the crypto market cap
stabilize at the $1 trillion USD point and rally from there,” he added.
source link : https://cointelegraph.com/news/bullish-rate-hike-why-crypto-spiked-today-in-the-face-of-bad-news
