Crypto markets rallied after the announcement of a 75 basis point interest rate hike in the United States, with experts explaining that markets may have initially braced for much worse.
On July 27, the price of Bitcoin (BTC) jumped about 8% to the mid-point of $22,500 after the decision of the Federal Open Market Committee (FOMC) to raise interest rates again. Many other top crypto assets also rallied, with Ether (ETH), Polkadot (DOT), and Polygon (MATIC) posting significant double-digit gains over the past 24 hours.
Quantum Economics founder and CEO Matty Greenspan on Wednesday jokingly questioned whether it was a “bullish spike in interest rates” on Twitter.
Speaking to Cointelegraph, Greenspan noted that investors had clearly expected worse and suggested that this latest bounce was nothing out of the ordinary.
“Markets like to go higher on Fed days, even when their decision is to be tight.” Powell is particularly adept at delivering bad news. Obviously, investors expected worse.”
Markets were expecting a bigger jump. https://t.co/HkR8Upfi52
— Mati Greenspan (@MatiGreenspan) July 27, 2022
The Fed’s attempts to reduce inflation by raising interest rates are usually associated with a withdrawal of investment activity in the markets.
However, there are mixed opinions among the community as to whether the latest pump will have enough momentum to hold higher or if there is a significant recovery in the cards before the market starts to fully recover.
Don’t you see the price just hovering between 19k and 23k during a downtrend and no signs of rallying?
If you want to buy here, go ahead. Then don’t feel sorry or cry if the market makes new lows, which is likely.
I don’t buy.
— il Capo Of Crypto (@CryptoCapo_) July 27, 2022
Pav Hundal, an analyst at Australian crypto exchange Swyftx told Cointelegraph that the company was “surprised by the abundance of reaction to yesterday’s rate hike” as the underlying macro landscape still appears to be up in the air.
The Federal Reserve says one thing and the markets seem to hear something else every time we see interest rates rise. In June, the Fed suggested that big rate hikes would be “unusual”, this time Jay Powell hinted that the pace of increases could “slow”.
“The best indicator of what’s to come is the underlying economic data, and at least for now some inflationary pressures appear to be easing, with gas prices falling along with futures prices for staples like corn and wheat, as well as some supply costs ,” he added.
Related: Ethereum Price ‘Cup and Handle’ Pattern Hints at Potential Breakout Against Bitcoin
Hundal noted that Swyftx saw a 100% increase in early trading around the news, indicating that “there are clearly a lot of people who see value in the current market prices.”
The analyst stressed that a broader bullish or bearish trend likely won’t become apparent until the US releases key data related to its gross domestic product (GDP) performance in the coming days, which could signal whether the country is officially in recession or no :
“The good news is that we won’t have to wait too long to see what happens to the crypto market when the initial volatility dies down. The US is about to release its GDP data and it will 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 cryptocurrency market cap stabilize at the $1 trillion USD point and rise from there,” he added.
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