Aaryamann Shrivastava
FXStreet
- The Federal Reserve announced a 75 basis points hike in key interest rates for the third time this year, increasing the federal fund rate to 3% - 3.25%.
- Following the announcement, US stock markets erased gains observed since the opening bell.
- The larger impact is yet to be seen on the crypto market as, following historical instances, the likes of Bitcoin and Ethereum are expected to test lower lows.
Following weeks of anticipation, the Federal Reserve once again raised the key interest rates on Wednesday by 75 basis points. The impact of this hike was no different than what was expected out of the markets, as the US stock markets dipped into the red after the decision. The crypto market, however, did not react as terribly.
Fed repeats history, again
For the third time this year, the Federal Reserve has decided to raise the interest rates of this magnitude. The Federal Open Market Committee (FOMC) has set a target of achieving inflation at the rate of 2% in the long run. For the same reason, the range of the fund rate has risen to 3% to 3.25%, making it the highest in almost 15 years.
However, this will not be the end of it, as the Fed's economic projections show that the central bankers expect the policy rate to reach 4.4% by the end of this year and 4.6% by the end of next year.
The statement released following the interest rate hike reads,
"The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals."
Following the hike, the US stock markets reversed earlier gains and turned negative. The Dow Jones, the NASDAQ and the S&P500 indexes were shedding 1.73%, 1.45% and 1.75%, respectively, on the day.
Crypto market to take the heat?
Given Bitcoin's rising correlation with the stock markets, some fall in price was expected out of BTC and the crypto market post the Fed hike. However, despite BTC hitting intraday lows of $18,700, the candles are still keeping green. Although trading at $18,967, BTC is dangerously close to the 3-month-old critical support level of $18,600.
Bitcoin 24-hour price chart
Ethereum has remained mostly unmoved, trading at $1,322. Should by the end of the day Fed's announcement sink in, both BTC and ETH could trigger a dip in prices.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Coinbase lists WIF perpetual futures contract as it unveils plans for Aevo, Ethena, and Etherfi
Dogwifhat perpetual futures began trading on Coinbase International Exchange and Coinbase Advanced on Thursday. However, the futures contract failed to trigger a rally for the popular meme coin.
Stripe looks to bring back crypto payments as stablecoin market cap hits all-time high
Stripe announced on Thursday that it would add support for USDC stablecoin, as the stablecoin market exploded in March, according to reports by Cryptocompare.
Ethereum cancels rally expectations as Consensys sues SEC over ETH security status
Ethereum (ETH) appears to have returned to its consolidating move on Thursday, canceling rally expectations. This comes after Consensys filed a lawsuit against the Securities & Exchange Commission (SEC) and insider sources informing Reuters of the unlikelihood of a spot ETH ETF approval in May.
FBI cautions against non-KYC Bitcoin and crypto money transmitting services as SEC goes after MetaMask
US Federal Bureau of Investigations (FBI) has issued a caution to Bitcoiners and cryptocurrency market enthusiasts, coming on the same day as when the US Securities and Exchange Commission (SEC) is on the receiving end of a lawsuit, with a new player adding to the list of parties calling for the regulator to restrain its hand.
Bitcoin: BTC post-halving rally could be partially priced in Premium
Bitcoin (BTC) price briefly slipped below the $60,000 level for the last three days, attracting buyers in this area as the fourth BTC halving is due in a few hours. Is the halving priced in for Bitcoin? Or will the pioneer crypto note more gains in the coming days?