The FED rate hike is out and has dealt a heavy blow to cryptos in general. The federal reserve’s policy interest rate went up by 3/4 of a percentage point (about 0.75), translating the total to about 3% – 3.25%.
It may not seem like it, but this increase is a huge one from what it was in March when the federal funds rate was closer to zero.
This recent change in policy interest rates represents the quickest policy shift since the 1980s.
The price of cryptos in general, was inevitably affected by this. Bitcoin, for example, showed signs of choppiness in the hours after the news before the bears eventually took the initiative and sunk prices in sync with the fall of US stock.
Bitcoin & US Fed Rate Hike
Before the FED rate hike, Bitcoin struggled to stay at the $19,600 level.
At the time of writing, Bitcoin’s price is $18,927 despite showing bullishness last week and reaching the $22,000 level. Ethereum, on the other hand, didn’t fall as hard as Bitcoin after having experienced its fair share of bearishness before this.
Ethereum fell by about $50 and currently trades at about $1278. However, the price decline in both cryptocurrencies is nothing short of 3.8% each.
The FTX collapse brought in more bearishness in the crypto market. The flagship crypto, Bitcoin, plunged to the $16,740 zone, whereas ETH erased all its previous gain and tumbled to the $1230 level.
Harsh Crypto Winter
Inflation is one of the major issues the US has dealt with in the last few years.
Overall, the Federal Open Market Committee (FOMC) has increased market interest rates by about 75 basis points about three times in a row (amounting to a total increase of 225 basis points).
This is a potent indicator of how severe inflation has become over time.
Cryptocurrencies and their prices in the crypto market have always reacted badly to FED rate hikes. As an example, after the US Bureau Of Labor Statistics released inflation data for August, the prices of the Two largest Cryptocurrencies, Bitcoin and Ethereum, fell by less than 7% each in 24 hours.
This year, however, it is unclear how far cryptocurrencies can fall in price because the crypto market is still in the middle of a harsh winter.
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