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Bloodbath Anticipated for the Crypto Markets ahead of FED Rate Hikes

Published by
Elena R

The global crypto market cap seems to have again lost its bullish stance, and the top assets- Bitcoin and Ethereum- have begun to shed all their gains. In just one hour, Bitcoin and Ethereum have dropped by 4%.

Bitcoin has lost 7% over 24hrs, while Ethereum has dropped by around 6%. At the time of reporting, Bitcoin is trading at $21,761 while Ethereum is at $1,740.

Last week had been great for the crypto market after the release of the Consumer Price Index. The CPI for the month of July increased to 8.5%, indicating a decrease in inflation.

However, this has not stopped the federal reserve from assuming a hawkish stance and increasing the interest rates. The next FOMC meeting is scheduled for September, and it is anticipated that the FED will proceed with the rate hikes. 

According to James Bullard, St. Luis’s FED President, the chances of the FED increasing the interest rates by another 0.75% are high, which will work to down the inflation pressure.

It’s just not Mr. Bullard, even Neel Kashkari CEO and President of Minneapolis Federal Reserve believes that the increase in interest rates is important to curb inflation.

Crypto Markets To Suffer

The CPI is an excellent predictor of economic inflation. Higher inflation is frequently accompanied by the Federal Reserve enforcing its monetary policy in order to control inflation.

Back in June when there was an interest rate hike, the market reacted negatively was the first-born currency saw its worst financial quarter.

Till now, it was anticipated that inflation has started to cool down and there won’t be any further rate hikes. Additionally, the US GDP indicated a negative growth for two quarters. It can only be presumed that unexpected rate hikes in September would negatively impact the crypto space even further. 

Elena R

Elena is an expert in technical analysis and risk management in cryptocurrency market. She has 10+year experience in writing - accordingly she is avid journalists with a passion towards researching new insights coming into crypto erena.

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