Investors customarily pull their investments back across crypto community and markets when the Fed increases interest rates to control inflation.
Recently, a 75-basis point interest rate was announced across the United States. Nevertheless, crypto markets have been appreciating since this announcement, prompting experts to explain that it may be the markets’ coping mechanism for a worse situation.
When the Federal Open Markets Committee (FOMC) announced its decision to increase interest rates, Bitcoin responded with price appreciation on July 27, hitting the mid $22,500 mark.
Besides Bitcoin, other top altcoins such as Polkadot (DOT), Ether (ETH), Polygon (MATIC), and a couple of others hit 2-digit appreciation over 24 hours.
Mati Greenspan, who doubles as Quantum Economics founder and CEO, on Wednesday tweeted whether the price hike is a “bullish rate hike”.
In an interview with Cointelegraph, the investor noted that cryptocurrency investors were prepared for the worse in the crypto market. He suggested that the recent bounce isn’t extraordinary.
The crypto community has mixed opinions about the possibility of the latest hike to be sustained for long or if the market will depreciate before the market recovers fully.
We told you earlier why small-time investors are buying cryptocurrencies equities, signifying the return of investors’ confidence on crypto.
Another expert, during an interview with Cointelegraph expressed shock at investors’ response to the rate hike. The analyst at Swyft, an Australian crypto exchange, noted that his company was “surprised at the exuberance of the reaction to yesterday’s rate hike.”
The analyst, Pav Hundal, added: “The Fed is saying one thing and the markets seem to be hearing something else every time we see rate rises.
In June, it was the Fed suggesting large rate hikes would be ‘uncommon,’ this time around, it is Jay Powell hinting that the pace of increase might ‘slow’.”
He noted further that a lot of investors see value in the current prices of digital assets, adding that his company foresaw a 100% increase in early trading triggered by the news.
In his opinion, the crypto market may not experience a more pronounced bearish or bullish trend until the United States makes important data about its Gross Domestic Product (GDP) available to the crypto community, a factor that may help it determine whether the country is currently battling recession or not.
Hundal concluded that “But if the macro landscape starts to show signs of resilience, we could see the crypto market cap stabilize at the $1 trillion point and rally from there.