Will a Rate Hike Impact Bitcoin and Crypto?
With another rate hike expected to be announced on Wednesday, the crypto market may face further challenges. Here are the key points to consider:
- Market Expectations: The market anticipates a 0.25 basis point rate hike, with a 98.9% probability according to the CME Fedwatch tool.
- Strong Job Market: Despite decreasing inflation, Federal Reserve Chairman Jerome Powell points to a robust labor market as a reason to continue tightening. He believes more job losses are needed to curb spending and potential inflationary pressures.
- The Fed’s Reactive Policy: The Federal Reserve has historically been late to tighten or ease monetary policy, and often extends these measures for too long.
- Rate Hike Outlook: The Fed is expected to proceed with another rate hike and may implement one more before the end of the year to slow down the job market and reduce inflation.
- Crypto Market Implications: The crypto market may have to wait longer for liquidity to return and stimulate the current bull market. Bitcoin is likely to benefit, especially if a Bitcoin Spot ETF is approved. However, in the short term, the crypto market may continue to struggle amidst rising rates.
Hot Take: While a rate hike may have implications for the crypto market, the long-term potential of cryptocurrencies remains promising. Stay informed and adaptable to navigate the current market conditions.
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