The crypto market has had a tremendous year in 2022. The economic environment has been relentless, and today’s FOMC meeting adds to the overall angst in crypto. The Washington, DC-based Federal Reserve began a two-day monetary policy meeting.
The Federal Open Market Committee (FOMC), the Federal Reserve’s monetary policy-making body, will decide on the next interest rate hike at its regular meeting. Analysts predict that the meeting will be a game changer for the crypto industry.
The Federal Open Market Committee (FOMC) consists of 12 members. In this, there are seven governors of the Board of Governors, one president of the Federal Reserve Bank of New York and four presidents of the remaining 11 Reserve Banks.
The FOMC’s rate hike decision threatens a serious fall in the crypto market
in 2022, The FOMC higher rates have already been felt in stocks, cryptocurrencies, commodities (such as oil) and many other assets. But what can investors expect going forward, and how long will rate hikes affect the markets?
Four times this year, the Fed has raised rates, and it’s easy to see when markets really realized that the central bank wasn’t kidding about its plans to tighten monetary policy. In November 2021, cryptos and many riskier stocks hit highs. However, since then, digital assets have mostly trended downward.
Bitcoin, the leading cryptocurrency, is down roughly 71 percent from its November high. Ethereum, the second largest cryptocurrency, is experiencing a significant drop of 68 percent. However, Ethereum is doing something called “reconciliation”.
The FOMC’s decision to raise interest rates is expected to have a major impact on risk-class assets. But market experts are divided on whether the Fed will go too far and whether that has been reflected in stock and crypto prices. This uncertainty creates more volatility in the markets.
Cryptocurrency has often been painted as a solution to various problems: inflation, low interest rates, lack of purchasing power, devaluation of the dollar, and more. Those benefits were easy to buy when crypto was on the rise, to the exclusion of other assets. However, that narrative has worsened in recent months.
on wednesday Bitcoin It was volatile around $19,300 after the cryptocurrency sold off for the entire week. This is because crypto investors are gearing up for the FOMC’s interest rate hike decision later this evening.
Bitcoin analysts are watching to see where the digital asset will trade after the central bank’s major decision. The June 17 summer low of $17,708 is considered a test point.
Major cryptocurrencies are down
Right now, the major cryptocurrencies are going through a rough patch in what appears to be a bad market. Bitcoin (BTC) is the leader today and is down almost $19,000. As of this writing, BTC is trading around $19247. Also, Ethereum is trading at USD 1,321.
Although Ethereum has been very successful with its technical update, the Merge did not positively affect the price of ETH. In fact, the price of Ethereum has fallen by more than 16% in the last week. Merge has put the second largest crypto on the SEC’s radar, albeit a technical achievement of the Ethereum protocol.
Other high-end coins have suffered significantly. Binance Coin (BNB) is down 2.39 percent in the last 24 hours, according to CoinMarketCap. Solana and Cardano are also lagging behind with significant losses. In the last 24 hours, the movement of the top 10 cryptocurrencies has been uncertain. The Cryptopolitan team has kept a full watch on each crypto coin and classified them accurately.
The next FOMC interest rate decision will have a big impact on Bitcoin and other major cryptocurrencies. However, most crypto traders are already predicting a .75% increase. Many experts believe that the 75bps increase will cause the bitcoin price to rise as soon as it fully appreciates.
If the FOMC gives less than a 100 basis point hike, it would make sense to see a small relief rally – this could be quite large if the FOMC gives less than a 75 basis point hike, although that seems highly unlikely.
John Toro, head of trading at Independent Reserve
While the recent rise in the dollar may be good news for American leaders and businesses, it has had the opposite effect on bitcoin. According to one source, bitcoin is “very sensitive to rate hikes.” In other words, as the value of the dollar goes up, the value of bitcoin goes down. Since January 1, the dollar has grown by 15.78%. The current rate of USD strength has not been seen in the last 20 years.
The crypto market is in for a long week
The Federal Reserve’s FOMC rate decision doesn’t just affect the cryptocurrency industry; traders are scrambling to make last-minute moves. The Federal Reserve’s decision comes amid an action-packed week on the policy front, with the Bank of Japan and the Bank of England set to talk rates on Thursday.
The revisions could cause major swings in global markets as traders struggle to determine where lending rates will go after recent significant hikes by the Riksbank and the Bank of Canada.