Cryptocurrency markets have soared since the announcement of a 75 basis point interest rate hike in the United States, with experts explaining that markets may have initially prepared for much worse..
July 27th, the price of bitcoin (BTC) rose around 8% to reach $22,500 following the decision of the Federal Open Markets Committee (FOMC) to raise interest rates again. Many other major crypto assets also rose in priceand Ether (ETH), Polkadot (DOT), and Polygon (MATIC) all saw notable double-digit gains in the last 24 hours.
On Wednesday, the founder and CEO of Quantum Economics, Mati Greenspan jokingly questioned on Twitter if it was a “bullish rate hike”.
Speaking to Cointelegraph, Greenspan noted that investors expected worse and suggested that this latest rebound is nothing out of the ordinary.:
“Markets love to rally on Fed days, even when their call is tough. Powell is especially adept at delivering bad news. Investors clearly expected worse.”
Markets had expected a larger increase. https://t.co/HkR8Upfi52
—Mati Greenspan (@MatiGreenspan) July 27, 2022
Markets expected a higher rise. https://t.co/HkR8Upfi52
The Federal Reserve’s attempts to contain inflation by raising interest rates are often associated with a decline in investment activity in the markets.
Nevertheless, there are mixed opinions among the community on whether the latest pump will have enough momentum to stay higher or if a major pullback is coming before the market starts to fully recover.
Can’t you see the price hovering between 19k and 23k during a downtrend and no signs of accumulation?
If you want to buy here, go ahead. So don’t sit back and cry if the market makes new lows, which is likely.
I’m not buying
— the Crypto Capo (@CryptoCapo_) July 27, 2022
Can’t you see that the price is hovering between $19,000 and $23,000 during a downtrend and no signs of accumulation? If you want to buy here, go ahead. Then don’t sit back and cry if the market hits new lows, which is likely to happen. I’m not going to buy.
Pav Hundal, an analyst at Australian cryptocurrency exchange Swyftx, told Cointelegraph that the company was “surprised by the exuberance of the reaction to yesterday’s rate hike.”as the underlying macro picture still seems to be up in the air:
The Fed says one thing and the markets seem to hear another every time we see rate hikes. In June, it was the Fed that suggested that large rate hikes would be “rare”. This time it’s Jay Powell hinting that the rate of rise could “slow down.”
“The best indicator of things to come is underlying economic data and, for now at least, it looks like some inflationary pressures are easing.such as falling gasoline prices along with futures prices for commodities like corn and wheat, as well as some transportation costs,” he added.
Hundal went on to point out that Swyftx saw a 100% surge in early trades around the news, indicating “there are clearly a lot of people who see value in current market prices”.
The analyst stressed that a larger upward or downward trend will probably not become apparent until the United States publishes important data related to the evolution of its gross domestic product (GDP) in the coming days, which could indicate whether the country is officially in recession or not:
“The good news is that we are not going to have to wait too long to see what happens to the cryptocurrency market when any initial volatility fades. The United States is about to release its GDP data and that is going to be a major stress test. Any negative sentiment from then could wipe out recent gains.”
“But if the macro picture starts to show signs of resilience, we could see the crypto market cap stabilize at the $1 trillion point and rebound from there,” he added.
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